Markets Brace for NFP After the Market Holiday Tomorrow – US Market Wrap
Stocks recovered from session lows as a solid $22 billion sale of 30-year Treasuries provided some relief after a recent spike in yields that alarmed investors around the world.
The S&P 500 was little changed after falling below 5,900 earlier. However, equities struggled to gain traction as traders avoided riskier bets, with the market set to close on the eve of Friday’s jobs report. According to Citigroup, the options market expects the US equity benchmark to move by about 1.2% in either direction following the US employment report. This would be the largest implied move on a jobs day since September.
Last month, US employers likely reduced hiring in order to cap off a year of moderate but healthy job growth, which economists predict will continue in 2025. The majority of investors are keeping a closer eye on payrolls than usual, according to a survey by 22V Research. Just 26% of respondents believe that Friday’s data will be “risk-on,” 40% believe that it will be “risk-off,” and 34% believe that it will be “mixed/negligible.”
No major progress was made in the most recent Federal Reserve minutes, which revealed that officials changed their stance on rate-cutting in the face of elevated price risks and decided to proceed more slowly in the months to come. Christopher Waller, the governor of the Federal Reserve, stated that he thinks inflation will continue to decline in the direction of the central bank’s 2% target.
The S&P 500 rose 0.2%. The Nasdaq 100 showed little change. The Dow Jones Industrial Average gained 0.2%. The US stock market will close on January 9 to observe a national day of mourning for former President Jimmy Carter. The bond market will close at 2 PM ET.
The yield on 10-year Treasuries fell two basis points to 4.67%.
The 20-year yield, a laggard on the US government debt curve since its reintroduction in 2020, briefly rose above 5%. UK markets fell, pushing bond yields to their highest level in more than a decade. The Dollar gained 0.4%.
