US stocks closed mixed on Tuesday following fresh jobs data released by the US Bureau of Labor Statistics.
Tech was the biggest gainer of the day with the Nasdaq Composite (^IXIC) closing up about 0.3%. The benchmark S&P 500 (^GSPC) hugged the flatline while the Dow Jones Industrial Average (^DJI) dropped more than 0.2%, or roughly 80 points.
A losing start to December is putting November's roaring rally in the rearview mirror. Doubts are surfacing about the notion the Federal Reserve will soon call an end to rate hikes, sapping enthusiasm. Investors are now looking to upcoming labor market data for evidence the US economy is headed for a so-called soft landing.
Tuesday's reading on job openings in October showed slowing demand in the labor market with job openings sliding to 8.73 million last month, down from 9.35 million openings in September and 10.47 million in the prior year.
Over the month, the number of hires and total separations changed little at 5.9 million and 5.6 million, respectively, according to the US Bureau of Labor Statistics. Within separations, quits (3.6 million) and layoffs and discharges (1.6 million) were changed little.
ADP private payrolls numbers will be released on Wednesday while Friday's crucial monthly jobs report will be scoured for catalysts for the Fed to change policy course.
Nasdaq closes higher
US stocks closed mixed on Tuesday after job openings in October pointed to slowing demand in the labor market.
Tech was the day's winner with the Nasdaq Composite (^IXIC) closing up about 0.3%. The benchmark S&P 500 (^GSPC) hugged the flatline while the Dow Jones Industrial Average (^DJI) dropped more than 0.2%, or roughly 80 points.
Stocks trending in afternoon trading
Here are some of the stocks leading Yahoo Finance’s trending tickers page during afternoon trading on Wednesday:
Tesla (TSLA): Shares climbed about 1.5% following upbeat data from China, with the EV maker currently on pace to reach best-ever quarterly deliveries in the country. Optimism is also growing that Tesla's controversial Cybertruck will create a "halo" effect and boost sales of other vehicle models within the company.
CVS (CVS): Shares climbed 3% after the healthcare giant announced plans to change how it prices prescription drugs. The move is an attempt to transition to a simpler model and increase transparency. It could also mean some savings for consumers beginning next year.
AT&T (T): Shares of the telecom giant rose 4% on news of its network deal with Stockholm-based tech company Ericsson (ERIC). The company revealed it plans to spend up to $14 billion on network equipment over the five-year deal with Ericsson. Ericsson shares were up about 4.5%.
Charter Communications (CHTR): The stock dropped more than 8% after CFO Jessica Fischer said "it’s likely that we could end up with negative internet net adds inside of Q4." Fischer made the comments at a UBS media conference on Tuesday. Shares of other cable companies also dropped on the comments with Comcast (CMCSA) falling about 4% while Disney (DIS) slid 1.5%.
Market’s hopes for 2024 Fed rate cuts ‘overdone,’ BlackRock strategist says
The market's aggressive move to price in more interest rate cuts in 2024 has been "overdone" according to BlackRock.
Markets are currently pricing in at least 100 basis points of interest rate cuts next year, starting in the second quarter, per the CME FedWatch Tool.
"That is really aggressive," BlackRock Investment Institute global chief investment strategist Wei Li said at a media roundtable on Tuesday. "Something will have to go seriously wrong for that to come through. So we do think that the Fed will cut rates, probably in the second half of next year, but how many cuts they will deliver will be quite a bit less compared with the old economic cycles, old recessions."
BlackRock believes the economy is still "normalizing" from the pandemic and a tighter-than-usual labor market is one of several factors fueling more growth than one would typically expect at the end of a historically aggressive interest rate hiking cycle from the Federal Reserve. This has played out in closely watched data points, like consumer spending where Americans have consistently opened up their wallets at more aggressive pace than projected, leading to an overall economic expansion in 2023, a year many initially thought would end in recession.
Li says this means the Fed will need to hold back on aggressive cuts next year to stop "further inflationary pressure."
Disney board battle heats up
Activist investor Ancora is encouraging Disney (DIS) to add Trian Fund Management's Nelson Peltz to its board, calling it the "the right addition at this key moment in time."
"We believe Disney is saying the right things about restructuring and transforming the enterprise. Nonetheless, the addition of a shareholder representative or investor-designated directors to the Board can help ensure that these efforts are carried out in the most effective way," the activist wrote in a letter to shareholders on Tuesday.
Ancora, which has $8.7 billion in assets under management, did not disclose the size of its stake in the entertainment giant.
The firm said in the letter that Disney's current board is largely responsible for the company's recent struggles in entertainment, including its dismal box office performances and heightened streaming losses. It also accused the board of "politicizing" the brand, an apparent reference to its ongoing political battle with Florida Governor Ron DeSantis.
Disney did not immediately respond to Yahoo Finance's request for comment on the letter.
Trian said last week that it was moving forward with a proxy fight after Disney turned down its request for board representation. A source familiar with the matter told Yahoo Finance that Trian is seeking multiple board seats at the company.
Dow biggest laggard in afternoon trading
US stocks took a leg lower in afternoon trading on Tuesday after job openings in October fell to their lowest level since March 2021.
Bank execs 'cautious' heading into 2024
Bank executives had a cautious tone while speaking at the Goldman Sachs US Financial Services Conference in Manhattan on Tuesday.
As Yahoo Finance's David Hollerith reports:
Executives from some of the country's biggest banks noted the resilience of the US economy, but warned loan losses are likely to continue and urged restraint regarding 2024 outlooks.
"2023 has been an interesting year," Goldman Sachs (GS) CEO David Solomon said. Solomon rattled off the concerns financial institutions faced this year, including a regional bank crisis in the spring, a rapid rise in interest rates, and geopolitical risks.
For the US economy, Solomon said "the chance of a soft landing is much higher," referring to the idea the Federal Reserve could bring inflation back to its 2% target without causing a recession. Still, Solomon said it made to remain "cautious" as the firm approaches 2024.
Bank of America (BAC) CEO Brian Moynihan was firmer in his assessment of the economy, saying, "The economy has entered a soft landing. It's set up."
Moynihan noted the firm's data showed consumer spending is growing at a pace of about 4%, less than half the 9% growth seen from 2021 to 2022.
"The way customers are spending their money is leveled out," Moynihan said. "It's not a credit risk question. It's just their appetite [for] credit is down."
Bank of America anticipates the Fed will cut interest rates two or three times next year and four times in 2025.
"This will be higher for longer, but higher in the context that we sort of won the war on inflation," Moynihan said. "We've got to be careful not to win it by too much right now."
Cooling labor market 'to keep further rate hikes off the table'
Job openings in October fell to their lowest level since March 2021, another sign of slowing demand in the labor market.
According to data released by the US Bureau of Labor Statistics Tuesday morning, job openings slid to 8.73 million last month, down from 9.35 million openings in September and 10.47 million in the prior year.
"The ratio of job openings to the number of unemployed fell to 1.34, its lowest since August 2021, suggesting that the labor market is coming into a better balance between the supply and demand of labor," Oxford Economics lead US economist Nancy Vanden Houten wrote in reaction to the data.
"Evidence of cooler labor market conditions will keep further rate hikes off the table, but we don't expect rate cuts until Q3 of next year," Houten continued. "The Fed needs to be convinced that inflation is on a path back to 2% and we expect the progress toward that goal to occur gradually over the next several months."
Following the release of the data, markets were pricing in a 55% chance the Federal Reserve will cut interest rates at its March meeting next year, according to data from the CME Group.
In addition to job openings, the quits rate was unchanged in October. Oxford Economics described the quit rate as a good leading indicator of wage pressures.
"At 2.3%, the quits rate is off its record high and in line with its 2019 average. Wage growth is still too strong to be consistent with 2% inflation, but we expect it will continue to moderate as the pace of hiring slows," the economist said.
China hit with credit downgrade
Credit rating agency Moody's cut its outlook for China's credit to negative from stable, citing concerns over rising debt levels as Beijing attempts to correct a spiraling property downturn, coupled with lower medium-term economic growth.
The downgrade, Moody's first for China since 2017, comes as the country has struggled with its post-pandemic recovery and the consumer remains weak. The unemployment rate has also remained stubbornly high for young people.
In response to the downgrade, China’s Ministry of Finance said it was "disappointed."
"Since the beginning of this year, in the face of the complex and harsh international situations, and against the background of an unstable global economic recovery and weakening momentum, China’s macro economy has continued to recover and has been advancing steadily," the ministry said, according to an online transcript of a Q&A session cited by the Associated Press.
Those concerns regarding the world's second-largest economy helped drive a sell-off in China stocks with Hong Kong's Hang Seng index (^HSI) dropping 1.9% while the Shanghai Composite index (SSE) fell about 1.7%.
Moody's said it expects China's GDP to grow at a 4% annualized pace both next year and in 2025 before slowing to a pace of 3.8% for the remainder of the decade.