(Bloomberg) — U.S. bonds pared losses while stocks extended their rout into the new year following mixed data on industrial activity and the labor market.
Most read on Bloomberg
Ten-year Treasury yields held back their rise from 4%, the highest since mid-December, while the S&P 500 slipped 0.6%. The Nasdaq 100 fell 0.8% as investors continued their withdrawal from technology stocks. The dollar advanced, strengthening for a fourth day, the longest period since November. Nvidia Corp. fell while crypto-related stocks floundered as Bitcoin erased most of its gains this year.
The Institute for Supply Management’s manufacturing indicator remained below a key level of 47.4 last month, according to data released Wednesday. The index has remained below the 50 level – indicating a contraction – since the end of 2022. Separate data showed the number of job openings fell slightly in November compared to the previous month’s revised figure.
“Overall, the labor market remains strong, but demand is cooling and balancing better with supply,” wrote Rubeela Farooqi, chief U.S. economist at High Frequency Economics. “This data will be good news for policymakers and will support the Fed’s view that the next move in rates will be lower, likely in the second quarter.”
U.S. markets extended Tuesday’s fall, the biggest global rout since 1999, for the first full day of trading in a year. Traders are still waiting for the minutes of the latest Federal Reserve meeting.
Richmond Fed President Thomas Barkin was reluctant to give a forecast on when the U.S. central bank’s first rate cut would take place. “Conditions are constantly evolving,” he said in prepared remarks Wednesday. “Our approach too. So, attach you belt. This is proper safety protocol, even if you expect a soft landing.
Read more: Fed’s Barkin says soft landing looks more likely, but not inevitable
The minutes are particularly interesting for investors because the December meeting was a key catalyst for the sharp rise in Treasuries, after Fed Chairman Jerome Powell said policymakers discussed rate cuts of interest.
“We do not expect such drastic cuts to be supported by the minutes’ discussion, but we will remain attentive to any mention of rate cuts, what would trigger them and how soon they might come,” said Karl Steiner, director of analysis at Skandinaviska Enskilda Banken AB.
Elsewhere, a fall in Bitcoin on Wednesday saw the cryptocurrency erase almost all of the gains it had made so far this year. The world’s largest token fell 9.2% to below $41,000. Volatility spilled over into crypto-related stocks, with shares of crypto exchange Coinbase Global Inc. falling more than 7%.
Key events this week:
-
US FOMC Minutes, ISM Manufacturing, Job Offers, Light Vehicle Sales, Wednesday
-
China Caixin PMI services, Thursday
-
Eurozone S&P Global Services Eurozone PMI, Thursday
-
First unemployment claims in the United States, ADP employment, Thursday
-
Eurozone CPI, PPI, Friday
-
US non-farm employment/employment, factory orders, ISM services index, Friday
-
Richmond Fed President Tom Barkin – a 2024 FOMC voter – speaks Friday
Some of the main market movements:
Actions
-
The S&P 500 fell 0.6% as of 10:26 a.m. New York time.
-
The Nasdaq 100 fell 0.9%
-
The Dow Jones Industrial Average fell 0.5%
-
The Stoxx Europe 600 fell 1.1%
-
The MSCI World index fell 0.9%
Currencies
-
The Bloomberg Dollar Spot Index rose 0.3%
-
The euro fell 0.2% to $1.0921
-
The British pound rose 0.2% to $1.2647
-
The Japanese yen fell 0.9% to 143.33 per dollar
Cryptocurrencies
-
Bitcoin fell 5.9% to $42,451.63
-
Ether fell 6.4% to $2,214.79
Obligations
-
The 10-year Treasury yield rose seven basis points to 4.00%
-
The German 10-year yield fell two basis points to 2.05%
-
The UK 10-year yield rose two basis points to 3.66%
Raw materials
-
West Texas Intermediate crude rose 3.2% to $72.63 a barrel
-
Spot gold fell 1% to $2,038.28 an ounce
This story was produced with the help of Bloomberg Automation.
–With help from Alex Nicholson, Tassia Sipahutar, Pearl Liu, Alice Gledhill, James Hirai and Joanna Ossinger.
Most read from Bloomberg Businessweek
©2024 Bloomberg LP