Tuesday, January 7, 2025
Market indexes began the trading day in positive territory, but relinquished it on monthly economic data that was released shortly after the open. The Dow dropped -178 points, -0.44%, and it was the leader among major indexes. Both the S&P 500 and Nasdaq lost their two-day winning streak, -1.11% and -1.88%, respectively today. (The Nasdaq basically gave back yesterday’s gains.) And the small-cap Russell 2000 slipped -0.97% on the session.
JOLTS Data Indicates Flat-to-Down Labor Market
Today’s release of the Job Openings and Labor Turnover Survey (JOLTS) showed that job openings increased in November, to 8.1 million from an upwardly revised 7.84 million the prior month. This is the highest print since May of last year, though remains within range of what we’ve seen for most of the past 12 months.
Both the Hires Rate and the Separations Rate in this report hit lows not seen since June of 2024: +3.3% and +3.2%, respectively. Hires reached 5.3 million, -300K over the past year. Separations came in at 5.1 million for November. Meanwhile, Job Quits were lower than expected at 3.1 million, while Layoffs and Discharges were in-line with expectations at 1.8 million.
Basically, there’s not a lot of hiring going on currently, but neither is there much firing. And those with jobs are currently in the mood to hang onto them rather than cut ties and find new employment in the present environment. We’ll find out tomorrow morning in ADP’s private-sector payrolls whether there’s much benefit from changing jobs on an income basis; the last couple months have shown a dwindling gap between job stayers and job changers.
ISM Services Improved in December
Meanwhile, the Institute for Supply Management (ISM) has posted its third-highest month of the year for Services growth in December: +54.1% versus the +53.4% expected and the unchanged +52.1% from the previous month. Business activity blossomed last month to +58.2% from November’s +53.7%. These figures continue to demonstrate how Services are driving the U.S. economy.
However, when this report came out, stock market indexes sank into the red on the news. That’s because stronger economic prints like this ISM Services report have a negative effect on the chances the Fed will continue to cut interest rates at the end of this month. Bond yields rose, with the 10-year Treasury bill climbing to +4.699% — the highest since April. And if we see further strength in metrics like ISM going forward, we may expect to push out that next Fed rate cut even further.
What to Expect from the Stock Market Wednesday
Jobs Week continues when ADP (ADP – Free Report) announces new private-sector payroll results from last month. Estimates are for +136K new private-sector positions filled, down from +146K reported a month ago. Also Initial Jobless Claims are expected to remain in their recent range to +215K (+211K was last week’s headline). Continuing Claims last week dropped significantly to 1.84 million from 1.91 million the prior month.
We’ll also get the Fed minutes from the latest Federal Open Market Committee (FOMC) meeting Wednesday afternoon, which should give us some color on the “bearish cut” the Fed ushered ahead of the holidays. Most of the time, the press releases from the FOMC in real time are clear of intent, and even when they’re not, much is usually explained carefully — if sometimes defensively — by Fed Chair Jerome Powell. But every so often, there will be a morsel in the minutes notes that helps clarify something for market participants in real time.
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