What you need to know…
The S&P 500 Index ($SPX) (SPY) this morning is up +0.02%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.07%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.13%.
U.S. stocks this morning are mixed, with the Dow Jones Industrials falling to a 1-1/2 week low. Stocks are under pressure today after U.S. Dec nonfarm payrolls rose at less than half the expected pace, and after Dec average hourly earnings rose more than expected, stoking inflation concerns. The 10-year T-note yield jumped to a 9-1/4 month high of 1.767% today on the news, further weighing on technology stocks. A +10% jump in Discovery today, along with a rally in cruise line stocks, pushed the S&P 500 into positive territory.
U.S. Dec nonfarm payrolls rose +199,000, weaker than expectations of +450,000 and the smallest increase in a year. The Dec unemployment rate fell -0.3 to a 22-month low of 3.9%, showing a stronger labor market than expectations of 4.1%.
U.S. Dec avg hourly earnings rose +0.6% m/m and +4.7% y/y, stronger than expectationsof +0.4% m/m and +4.2% y/y.
The U.S. 7-day average of new U.S. Covid infections rose to a record 605,883 on Thursday.
Today’s stock movers…
Cruise stocks are climbing today after Stifel cruise stocks “stick out as overly compelling ideas” for investors looking for recovery stocks that underperformed in 2021. Norwegian Cruise Line Holdings (NCLH) and Royal Caribbean Cruises (RCL) are up more than +2%, and Carnival (CCL) is up more than +1%
Discovery (DISCA) is up more than +10% today to lead gainers in the S&P 500 after Bank of America raised its recommendation of the stock to buy from neutral on the potential for the merger with WarnerMedia.
U.S.-listed Chinese stocks are climbing today on reports that Chinese regulators have urged banks to step up lending to developers and ease debt restrictions. Pinduoduo (PDD) is up more than +6% to lead gainers in the Nasdaq 100. Baidu (BIDU), NetEase (NTES), and JD.com (JD) are all up more than +3%
T-Mobile (TMUS) is down more than -3% to lead losers in the S&P 500 and Nasdaq 100 after it reported Q4 preliminary prepaid net customer change of +49,000, well below the consensus of +94,973.
Texas Instruments (TXN) is down more than -2% today after Citigroup cut its recommendation on the stock to neutral from buy, citing concerns over the company’s margins.
Across the markets…
March 10-year T-notes (ZNH22) this morning are down -3 ticks, and the 10-year T-note yield is up +2.3 bp at 1.744%. Mar T-notes tumbled to a new 1-year nearest-futures low today, and the 10-year T-note yield rose to a 9-1/4 month high of 1.767%. Stronger-than-expected wage pressures that may prompt the Fed to hike interest rates as soon as the Mar FOMC meeting are weighing on T-notes today after U.S. Dec avg hourly earnings rose +4.7% y/y, stronger than expectations of +4.2% y/y. Losses in T-notes were limited after U.S. Dec nonfarm payrolls rose by only +199,000, less than half the expected pace.
The dollar index (DXY00) this morning is down -0.27%. Strength in EUR/USD today weighed on the dollar as signs of faster inflation in the Eurozone were hawkish for ECB policy and boosted the euro. The dollar also fell back after U.S. Dec nonfarm payrolls rose less than expected. Losses in the dollar were contained after the 10-year T-note yield rose to a 9-1/4 month high.
EUR/USD (^EURUSD) is up +0.25%. The euro is climbing today on concern a record increase in Eurozone consumer prices will force the ECB to tighten policy sooner than expected. Eurozone Dec CPI rose a record +5.0% y/y (data from 2001), stronger than expectations of +4.8% y/y. EUR/USD also found support after Eurozone Nov retail sales unexpectedly rose +1.0% m/m, stronger than expectations of -0.5% m/m and the biggest increase in 5 months. A bearish factor for EUR/USD was today’s data showing Eurozone Dec economic confidence fell -2.3 to a 7-month low of 115.3, weaker than expectations of 116.0.
USD/JPY (^USDJPY) is down -0.09% today. The yen is slightly higher today as weakness in Japanese stocks boosted the safe-haven demand for the yen. Gains in the yen are limited after today’s data showed Japan Nov household spending unexpectedly fell -1.3% y/y, weaker than expectations of +1.2% y/y, and the fourth straight month spending has declined.
February gold (GCG22) this morning is up +1.7 (+0.10%), and March silver (SIH22) is up +0.025 (+0.11%). Gold and silver this morning recovered from 3-week lows and are slightly higher. Dollar weakness today is supportive for precious metals, along with weakness in stocks, which boosts the safe-haven demand for precious metals. Gold also found support today on increased demand as a hedge against inflation after Eurozone Dec CPI rose a record +5.0% y/y (data from 2001), stronger than expectations of +4.8% y/y. Higher global bond yields today are limiting gains in gold.