On Friday, US benchmark equity indexes experienced a decline, while Treasury yields surged as traders assessed official data revealing that the economy added more jobs than anticipated in December. The Dow Jones Industrial Average and the Nasdaq Composite each fell by 1.6%, closing at 41,938.5 and 19,161.6, respectively.
The S&P 500 saw a loss of 1.5%, settling at 5,827, with real estate and financial sectors suffering the most significant downturns. In contrast, the energy sector managed to remain positive. It’s worth noting that US stock markets were closed on Thursday to honor the late former President Jimmy Carter. Throughout the week, the Nasdaq suffered a 2.3% decline, while both the Dow and S&P 500 fell by 1.9%.
In terms of economic indicators, the Bureau of Labor Statistics reported that total US nonfarm payrolls increased by 256,000 last month, significantly exceeding the consensus expectation of a 165,000 rise as per a survey by Bloomberg. Market analysts at BMO referred to the employment report as 'robust,’ asserting it highlights the durability of the US labor market and suggests continued expansion.
The firm believes that this information could keep the Federal Reserve in a holding pattern regarding interest rates for January as efforts intensify to alleviate inflation pressures. Further market speculation centers around the Federal Open Market Committee's anticipated decision to maintain current interest rates later this month, as indicated by the CME FedWatch tool.
However, US consumer sentiment appears to have waned this month, with inflation expectations reaching their highest levels since May. Preliminary results from the University of Michigan's Surveys indicate that consumer outlook for inflation over the next five years has risen to 3.3% from 3%, marking a significant one-month shift for the third time in four years. On the Treasury front, the US two-year yield rose by 12.4 basis points to 4.39%, while the 10-year yield climbed 8.4 points to 4.77%.
In the corporate landscape, Constellation Brands ($STZ) faced a significant drop in its stock values, plummeting 17%, making it the worst performer on the S&P 500 after the company downgraded its annual sales forecast following disappointing fiscal third-quarter results. In entertainment, Walt Disney's ($DIS) ESPN, alongside Fox ($FOXA) and Warner Bros.
Discovery ($WBD), announced the cancellation of their planned Venu Sports streaming service. Consequently, Warner Bros. shares decreased by 3.6%, while Disney's shares dropped 1%. Fox's Class A and B shares also fell by 1.6% each. In a more favorable light, Constellation Energy ($CEG) has reached an agreement to acquire the privately held energy company Calpine for a total consideration of $26.6 billion, inclusive of debt.
The news sent Constellation Energy's shares soaring by 25%, making it the top performer on the Nasdaq and the second best on the S&P 500. On the other hand, Walgreens Boots Alliance ($WBA) emerged as the biggest gainer on the S&P 500, skyrocketing nearly 28% after reporting better-than-expected fiscal first-quarter results, bolstered by sales growth across various divisions.
The company reiterated its full-year earnings forecast despite the challenging retail environment in the US. Furthermore, West Texas Intermediate crude oil prices surged by 3.6% to $76.61 per barrel after the US Department of the Treasury announced new sanctions against Russia, specifically targeting oil production and exports.
This could potentially heighten crude oil demand from certain producers in the Middle East, notably Saudi Arabia, as per a report from Saxo Bank. In precious metals, gold prices increased by 1% to $2,716.70 per troy ounce, while silver also advanced by 0.9% to close at $31.30 per ounce..