Stocks Pullback Ahead of Jobs Report
2:59 pm Thursday, December 01st, 2022
There was a weaker tone in the market today after yesterday’s huge rally effort. Some investors are presumably moving to take some money off the table, perhaps on the belief that the market overreacted yesterday to the remarks from Fed Chair Powell, which were deemed less hawkish than feared.
Participants received sobering economic data that brought general growth concerns back to the forefront. A 49.0% reading for the November ISM Manufacturing Index, which is the first sub-50% reading (the dividing line between expansion and contraction) since May 2020, has reined in some of the rebound enthusiasm.
The 2-yr Treasury note yield is down 13 basis points to 4.25% and the 10-yr note yield is down 14 basis points to 3.55%.
Initially, stocks moved higher out of the gate after the latest readings for the PCE and core-PCE Price Indexes showed a welcome moderation on a year-over-year basis. The upside momentum ran into a wall as the S&P 500 tested the 4,100 level and participants digested the ISM release.
We’ve been stuck in a narrow trading range since about 10:30 a.m. ET, when the S&P 500 tested a key technical level (its 200-day moving average at 4,048). That line of support held, but it will be a key area to watch in coming hours/days. Market bulls will want to see it hold up and preferably with the support of heavy volume.
The Dow Jones Industrial Average is the worst performer among the three main indices due to the sizable loss in Salesforce (CRM). The company reported earnings and announced that Bret Taylor will step down as co-CEO at the end of January.
Most of the S&P 500 sectors trade in negative territory today. The financial (-0.8%) and consumer staples (-0.5%) sectors have fallen to the bottom of the pack while communication services (+0.4%) and health care (+0.2%) lead the outperformers.
Notably, market breadth shows a modest positive bias despite the main indices all sporting losses. Advancers lead decliners by a 3-to-2 margin at the NYSE and a 6-to-5 margin at the Nasdaq.
