Stocks Recover After Strong Jobs Data
2:41 pm Friday, November 04th, 2022
The stock market started the session on an upbeat note, but things have deteriorated noticeably. The S&P 500, Nasdaq, and Dow were up 2.1%, 2.0%, and 1.9% at this morning’s highs. Now, the averages struggle to maintain a positive position.
The positive disposition at the open was fueled by a weakening dollar, a pullback in Treasury yields, renewed speculation that China will ultimately relax its zero-COVID policy, and an October Employment Report that was generally supportive of a soft landing outcome.
Around the time the stock market put in this morning’s highs, the 10-yr note yield was at 4.12% and the 2-yr note yield was at 4.65%. The U.S. Dollar Index was at 110.96.
The downshift in stocks followed the dollar reclaiming some strength and Treasury yields inching higher.
Currently, the 10-yr note yield sits at 4.16% and the 2-yr note yield is at 4.69%. The U.S. Dollar Index rose to 111.37.
There was also a big downside move in mega cap stocks that coincided with the indices falling to session lows. The Vanguard Mega Cap Growth ETF (MGK) was up 2.4% earlier, but now trades down 0.3%. Apple (AAPL) is a losing standout following reports that the company paused hiring for many jobs outside R&D in a continued cost-cutting effort, saying it is “taking a very deliberate approach in some parts of the business,” according to Bloomberg.
Notably, Chinese stocks and U.S. stocks with high exposure to the Chinese market, have maintained sizable gains despite index level performance. Aside from the renewed speculation about easing the zero-covid policy, Chinese stocks have also been boosted by reports that U.S. auditors completed their on-site inspection of Chinese-listed companies sooner than expected and China reportedly approving the use of the Pfizer (PFE) and BioNTech (BNTX) COVID vaccine for foreign residents.
JD.com (JD), Alibaba (BABA), and Pinduoduo (PDD) are winning standouts for Chinese names while Starbucks (SBUX) and Nike (NKE) are among the biggest winners for U.S stocks with high exposure to the Chinese market.
Roughly half of the 11 S&P 500 sectors trade in positive territory. Materials (+2.2%) and financials (+0.9%) enjoy the biggest gains while utilities (-0.7%) and real estate (-0.5%) bring up the rear.
