The stock market eased off sizable losses and felt some comfort after St. Louis Fed President James Bullard called 2023 a potentially “disinflationary year.” Major indexes are up in the last hour after selling off, following stronger-than-expected payroll and jobless claims numbers. This raised concerns the Fed will continue interest rate hikes, increasing the threat of a recession.
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In an afternoon address Bullard said that, while the policy rate is not yet in a zone that may be considered sufficiently restrictive, it is getting closer. He admitted that inflation signs are returning to relatively low levels and that 2023 may be characterized by disinflation.
Next up, investors will be watching the December job reports on Friday at 8:30 a.m. ET for additional insight into the labor market.
The S&P 500 retreated 0.8% while the Nasdaq fell 1%. The Dow Jones Industrial Average and Russell 2000 both shed 0.8%.
The tech-heavy Nasdaq 100-tracking Invesco QQQ trust ETF (QQQ) lost 1.1%.
Volume for the NYSE and Nasdaq was lower vs. the same time on Wednesday.
Crude oil regained 1.2% to $73.77 per barrel. The Energy Select Sector SPDR ETF (XLE) rose 2.1%. Natural gas continues to slide, down over 10%, and is trading at $3 per million British thermal units.
Bitcoin futures inched up 0.5% to $16,860. The 10-year Treasury note yield added 3 basis points to 3.71%.
The Innovator IBD 50 ETF (FFTY) held up better than the major stock market indexes, losing 0.6%.
European stock markets were mixed, with the German DAX down 0.4% and the Paris CAC 40 shedding 0.2%. The London FTSE 100 added 0.6% to close out the trading day.
Odds for a 25-basis-point hike by the U.S. Federal Reserve at the February meeting stand at 60.2%. That would take the fed funds rate to the 4.5%-4.75% range. Meanwhile, 39.8% of market watchers are looking for a 50-basis-point hike, according to the CME Group FedWatch Tool.
Jobs Data Reveals Strong Labor Market
December ADP jobs data beat expectations for 145,000 jobs by a country mile, reporting 235,000 additions. The reading shows strength over November’s 127,000 new jobs. Initial jobless claims for the week ending Dec. 31 fell to 204,000, less than the 225,000 consensus, and below the prior week’s 225,000.
Both readings show a continued strong labor market, indicating the Fed may continue its rate hikes to cool things down.
Solar Stock Hitting 2016 Lows; Data Storage Stock Back In Talks
Solar energy and battery producer Enphase Energy (ENPH) dropped another 3.7%, making it the ninth day in a row. The nine days of losses total over 23% and represent the longest losing streak since January 2016.
Solar stocks have fallen out of favor since mid-December, with the energy-solar industry group dropping from the 2nd highest ranking IBD industry group to the 46th spot.
Data developer of flash and hard drive disks Western Digital (WDC) popped 6.2% on Bloomberg news the company is back in talks to combine with fellow data storage company, Japan-based Kioxia.
Chinese e-commerce platform operator Pinduoduo (PDD) led the IBD 50, up 5.5% as Chinese stocks saw another day of strength. Shares are extended from the 20% to 25% profit zone of a choppy base with buy point of 70.12.
Bed Bath & Beyond (BBBY) plummeted over 23% to a 30-year low in Thursday’s stock market after noting it may seek bankruptcy. The retailer forecast a larger-than-expected $385.8 million net loss for the fiscal Q3 quarter, which was greater than the $276.4 million net loss in the prior year.
The distressed home retailer is exploring options including bankruptcy and says it has “substantial doubt” of it continuing as a going concern. Shares of the former meme stock now trade under $2 per share.
Regional crypto-related bank Silvergate (SI) tumbled over 42% in heavy volume after the bank had to sell over $8 billion in assets to cover customer withdrawals. The company also announced layoffs of around 40% of its workforce, about 200 employees.
Amazon (AMZN) dropped 1.4% after saying it will lay off over 18,000 employees, higher than the 10,000 announced in November. The e-commerce and media giant says it hired too many workers during the pandemic. Amazon employs over 1.5 million people. The stock is about 51% off its 52-week high.
Stock Market Today: Beverage Stock Plummets On Earnings
The Dow’s biggest loser on Thursday, Walgreens Boots Alliance (WBA), gapped down over 6% despite better-than-expected fiscal Q1 2023 EPS and sales. It also raised full-year 2023 sales guidance. The pharmacy retailer stock is about 37% off its 52-week high, and well below its 21-day exponential moving average.
Alcoholic beverage producer Constellation Brands (STZ) sold off over 8% after reporting mixed fiscal Q3 2023 results. The company reported worse-than-expected EPS but beat sales expectations.
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