The Dow Jones Industrial Average (^DJI) popped about 0.4%, while the benchmark S&P 500 (^GSPC) was up about 0.2%. After a Wednesday selloff, the Nasdaq Composite (^IXIC) pushed for gains, sitting just below the flat line in afternoon trade.
Investors looking for confirmation of bets on a March rate cut got uncertainty instead in the Fed minutes released Wednesday. While officials agreed rates had reached a peak and should be lower by the end of 2024, some signaled that they could stay at their historically high levels "for some time" depending on the path of inflation.
Multiple data points released Thursday morning showed the labor market remains intact while wages continue to cool, a welcome sign in the fight against inflation.
The latest ADP employment report showed private companies added 164,000 jobs in the month of December, above November's reading of 103,000 and higher than analysts expectations for 115,000 additions.
Elsewhere, the Department of Labor reported that 202,000 jobless claims were filed last week, below economist estimates for 216,000.
Meanwhile, US bond yields returned to gains, with the 10-year Treasury yield (^TNX) edging closer to 4% after falling away from that level on Wednesday.
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Oil falls as gasoline stockpiles signal weak demand
Oil prices reversed course on Thursday after weekly US gasoline and distillate fuel stockpiles pointed to lower demand.
West Texas Intermediate (CL=F) sank more than 2% before pairing most of those losses following the release of US crude inventory data. Brent (BZ=F) also sank into negative territory, losing its more than 1% of its earlier gains.
Gasoline stockpiles rose by 10.9 million barrels, their highest week over week increase in more than three decades, according to Energy Information Administration data.
Crude inventories fell by 5.5 million barrels for the week ending December 29, but the bigger than expected draw may reflect supplies from the US making up for shipment interruptions stemming from Red Sea tensions.
Oil futures were up more than 1% earlier in the session, extending their gains from Wednesday amid concerns of supply interruptions in Libya.
Mortgage rate decline fall stagnant
A precipitous fall in mortgage rates has stalled to start 2024.
The average rates for 30-year loans inched up to 6.62% from 6.61% a week ago, according to tracking by Freddie Mac on Thursday. Aside from this week's minuscule rise, rates have been declining for weeks since late October, falling nearly 117 basis points from a 12-month high of 7.79% at the end of October.
Those recent declines have boosted homebuyers' ability to purchase homes, but further affordability improvement could be curbed by a continual supply shortage, especially if lower rates bring back sidelined demand.
"While mortgage interest rates are expected to overall decline in 2024, minor fluctuations in weekly mortgage interest rates are to be expected," Jessica Lautz, National Association of Realtors’ deputy chief economist, wrote to Yahoo Finance.
"The biggest demand is likely to come from those who had been priced out of the homebuying market. For spring, there will likely be competition among the steady share of all-cash homebuyers and first-time buyers trying to edge in," Lautz added.
Earnings can still drive a stock market rally despite rough start to 2024, Bank of America says
Stocks are off to start in 2024.
The famed Santa Claus Rally didn't come. The Nasdaq Composite (^IXIC) had its fourth worth first day of a new year ever. And the Russell 2000 (^RUT), a darling of the recent market rally, just ha its third worst two-day start to a year ever.
"It's fair to say that financial markets have started 2024 with something of a mild hangover," deputy chief markets economist Jonas Golterman wrote in a research note Wednesday.
But some on Wall Street think the current drivers of the market have been macro focus. When that sentiment shifts to focus on earnings, the rally can continue.
Recent data from Factset shows analysts expect S&P 500 companies to report earnings growth of 11.7% for the full year, which would be above the 10-year average annual earnings growth rate of 8.4%.
That earnings backdrop is one of the main drivers behind why Bank of America sees nearly 10% for the S&P 500 from current levels, per Bofa equity strategist Ohsung Kwon.
"Earnings season, starting next week is gonna be key to the market," Kwon said.
With companies officially exiting the earnings recession in the third quarter, Kwon believes that momentum continuing is crucial to the bullish thesis.
"Companies have cut costs throughout the earnings recession," Kwon said. "They have managed margins. Margins went up for the second straight quarter. So I think the momentum is to the upside and if companies talk more positively this earning season, given that the rate pressure and the macro uncertainty has eased somewhat. Now, that's going to be bullish for equities."
Stocks teeter at the open
US stocks stalled on Thursday, struggling to shake off a dismal start to the year after Federal Reserve policymakers left hopes for an early interest-rate cut hanging.
The Dow Jones Industrial Average (^DJI) popped about 0.2%, while the benchmark S&P 500 (^GSPC) was down about 0.1%. Tech stocks signaled a return to their Wednesday selloff, as the Nasdaq Composite (^IXIC) dropped about 0.4%.
More soft landing signs in the labor market
Multiple data points released Thursday morning showed the labor market remains in tact while wages continue to cool, a welcome sign in the fight against inflation.
The latest ADP employment report showed private companies added 164,000 jobs in the month of December, above November's reading of 103,000 and higher than analyst expectations for 115,000 additions.
Also within the release, ADP revealed annual wage growth fell to 5.4% from 5.6% the month prior.
"We're returning to a labor market that's very much aligned with pre-pandemic hiring," said Nela Richardson, chief economist at ADP. "While wages didn't drive the recent bout of inflation, now that pay growth has retreated, any risk of a wage-price spiral has all but disappeared."
Elsewhere, data from the Department of Labor show 202,000 jobless claims were filed last week, below economist estimates for 216,000. Jobless claims are an area several economists have told Yahoo Finance they're monitoring for signs of a slowdown, as an uptick in claims would mean more people are being laid off from their job.
The big labor data update for the week still awaits investors as the December jobs report is expected for release at 8:30 a.m. ET on Friday.
The reason for the downgrade from analyst Harsh Kumar was similar to the one from peers at Barclays earlier this week: iPhone demand, especially in an expectedly weak Chinese market.
Apple's stock has already been hit this year, and it was down more than 1% in premarket trading on Thursday:
Piper Sandler's downgrade to neutral from overweight was perhaps less jarring than that of Barclays, which cut its rating to underweight on Tuesday. Apple's stock responded with its biggest percentage drop since September.
According to Bloomberg, the percentage of analysts with a bullish rating on the stock is at a three-year low.
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