After the longest weekly run in the green since 2004, stocks faltered on Friday as fresh economic data fueled the debate over when the Federal Reserve will lower interest rates.
More positive labour market data that will support prospects for interest rate decreases by the Fed was absorbed by investors. However, negative mood started to spread following the day’s initial good momentum. The Dow and S&P 500 experienced their worst start to a year since 2016, and the dismal finish ended a nine-week winning streak.
The flatline was gradually broken by the Dow Jones Industrial Average (^DJI). The tech-heavy Nasdaq Composite (^IXIC) increased by almost 0.1%, while the benchmark S&P 500 (^GSPC) increased by around 0.2%.
Following the release of the December US employment report, which revealed that the US economy added 216,000 jobs in December—more than the 175,000 experts had predicted—the main indices moved in both directions throughout the course of the day. At 3.7%, the unemployment rate remained constant.
The Institute for Supply Management (ISM) released separate statistics indicating a slowdown in services activity in December. Its services PMI decreased from November’s value of 52.7 to 50.6 for the month. Although a rating above 50 denotes increase, the services activity figure for December was at its lowest point since May.
In a dramatic reversal of a roaring gain spurred by great optimism the Federal Reserve will soon start relaxing monetary policy, stocks have plummeted in the first week of 2024.
In light of this, US bond rates have been rising; the 10-year Treasury yield (^TNX), which rose on Thursday, is now up around 5 basis points to 4.04%.
In other news, Foxconn (2354.TW), a supplier of iPhones, stated that it anticipates reduced first-quarter revenue due to weaker market demand. Due to worries about the sales of its next smartphone, two analysts downgraded Apple (AAPL), which resulted in further losses for the company’s shares. The decline in Apple’s stock value eliminated a market worth of about $175 billion.
Next week, new inflation figures will be released. Thursday’s Consumer pricing Index (CPI) report will assist determine if the central bank’s efforts to reduce pricing pressures are progressing as planned.
Regarding corporate results, a number of banks, such as Citi (C), Bank of America (BAC), Wells Fargo (WFC), and JPMorgan Chase (JPM), are scheduled to report later in the week, after Albertsons (ACI) and Tilray (TLRY). They will provide information about the US consumer’s situation and the status of the US economy in 2024.
With a market valuation of $2.843 trillion, the iPhone manufacturer continues to be the most valuable business on Wall Street, but its advantage has narrowed as Microsoft (MSFT) approaches a market valuation of $2.749 trillion.
Compared to the previous year, Apple’s iPhone revenue fell by almost $5 billion in 2023. The company’s flagship iPhone generates around half of its overall sales. As customers were put under pressure by rising interest rates and inflation last year, sales of Macs, iPads, and wearable technology also decreased.
Bullish analysts have concentrated on Apple’s expanding services division, which increased from $78 billion in 2022 to $85 billion in 2023, despite the company’s challenging week. When compared to the same period last year, revenue from services increased by about 20% in the most recent quarter.