Equities sold off this week as treasuries continued to put on the pressure. Should we expect some headwinds on the horizon?
Monday
S&P 500 0.55% | NASDAQ 1.24%
Markets continued to move higher following Friday’s trading as manufacturing data showed signs of improvement. The divergence of growth and the risk of reigniting inflationary problems this year is a primary concern right now but shook off any pressures to start the week.
Tuesday
S&P 500 -1.11% | NASDAQ -1.89%
The services sector gained in December, which was less of a surprise than the jobs data that was released on Tuesday. Markets nose-dived as job openings came in almost 370k more than expected. More jobs can be interpreted as strength for a growing economy, but markets see that as a sign of things to come regarding policymaking. The 10-year treasury rose on the day as equities markets began to sell.
Wednesday
S&P 500 1.16% | NASDAQ -0.06%
Interest rates remain elevated, which have contributed to high borrowing costs and less of an appetite to go into riskier assets for the intermediate turn, hence the recent selloff. With longer term rates higher, this lends itself to a more hawkish Federal Reserve. The prospect of rate cuts in January have been squashed as the Federal Reserve will likely keep rates where they are at least through March.
Thursday
S&P 500 0.00% | NASDAQ 0.00%
Markets Closed in Remembrance of Former President Jimmy Carter
Friday
S&P 500-1.54% | NASDAQ -1.63%
Non-Farm Payrolls exceeded expectations as the unemployment rate fell in December. Markets tumbled on the news as the 10-year treasury yield continued its climb.
Conclusion
S&P 500-1.94% | NASDAQ -2.34%
Markets enjoyed a tailwind in 2024, but uneasiness took its toll on markets during the week. There are concerns about the labor market being too strong! With strong job creation, the risk rises for increased inflation. With markets closely watching fixed investments that provide higher-than-trend yields, equity markets took note and interpreted this as a risk in the near term. A more gradual increase in the unemployment rate staves off the worries that a strong labor market gives to the reignition of inflationary concerns, but the opposite data was released this week. A correction is not a foregone conclusion but if investors’ appetite for risk drops then there may be a migration out of stocks in the near-term. The New Year momentum could provide some relief in the 1st quarter of the year. No matter which way the wind blows, the overall sense is that we may be navigating into some headwinds in the coming months as the economy reassesses the overall market conditions.
~ Your Future… Our Services… Together~
Your interest in our articles helps us reach more people. To show your appreciation for this post, please “like” the article on one of the links below:
FOR MORE INFORMATION:
If you would like to receive this weekly article and other timely information follow us, here.
Always remember that while this is a week in review, this does not trigger or relate to trading activity on your account with Financial Future Services. Broad diversification across several asset classes with a long-term holding strategy is the best strategy in any market environment.
Any and all third-party posts or responses to this blog do not reflect the views of the firm and have not been reviewed by the firm for completeness or accuracy.