The stock market saw an initial surge on Thursday, with stocks rising notably at the start of the session. However, this momentum could not be maintained, and prices fluctuated throughout the day. The major indices crossed the zero line multiple times during the morning before dipping into negative territory by early afternoon. They managed to recover some ground later in the session but ultimately ended the day with modest losses. The Dow decreased by 151.95 points or 0.4 percent, closing at 42,392.27. The Nasdaq saw a decline of 30.00 points or 0.2 percent, finishing at 19,280.79, while the S&P 500 slipped by 13.08 points or 0.2 percent, ending the day at 5,868.55.
Early trading saw support from investors seeking to buy stocks at currently reduced prices after a significant downtrend had rounded off 2024. However, this buying interest faded quickly as a Labor Department report revealed an unexpected decline in weekly jobless claims, seemingly backing the Federal Reserve's cautious approach to reducing interest rates. The report indicated a drop in initial jobless claims to 211,000 for the week ending December 28th, down by 9,000 from the previous week's revised figure of 220,000. This decrease surprised economists, who had anticipated a slight increase to 222,000 from the initially reported 219,000 the previous week. The jobless claims, now at their lowest level since late April 2024, hint at a robust labor market, which supports the Federal Reserve's measured pace for interest rate cuts in 2025. Nancy Vanden Houten, Lead US Economist at Oxford Economics, notes that the data aligns with expectations for three rate cuts this year, although recent developments could suggest fewer cuts.
The session's volatility may have stemmed from lower than usual trading volume, as many investors remained absent following the New Year's Day holiday on Wednesday. The downward close in broader markets was also influenced by significant declines in specific stocks. Notably, Tesla (TSLA) stocks fell by 6.1 percent following a drop in annual deliveries for 2024. Similarly, Apple (AAPL) shares decreased by 2.6 percent amid reports of the company slashing prices on its latest iPhone models in China due to increased competition.
Sector Dynamics
Despite the broader market's modest decline, gold stocks climbed significantly, resulting in a 4.4 percent increase in the NYSE Arca Gold Bugs Index, driven by a rise in gold prices. A surge in crude oil prices also led to notable gains for oil producer stocks, as noted by the NYSE Arca Oil Index's 1.3 percent increase. Natural gas and brokerage stocks displayed substantial strength, while housing, airline, and commercial real estate stocks saw significant downturns.
Global Markets
In Asia-Pacific trading, markets delivered mixed results on Thursday. China's Shanghai Composite Index and Hong Kong's Hang Seng Index both steeply declined by 2.7 percent and 2.2 percent, respectively, while Australia's S&P/ASX 200 Index rose by 0.5 percent. Conversely, European markets moved higher across the board. The U.K.'s FTSE 100 Index rose by 1.1 percent, Germany's DAX Index by 0.6 percent, and France's CAC 40 Index saw a 0.2 percent uptick.
In the bond market, treasuries retracted back to near the flat line after initial gains, with the yield on the benchmark ten-year note, which inversely correlates with its price, edging up slightly by less than a basis point to 4.575 percent, after hitting a low of 4.517 percent.
Outlook
Looking towards Friday, market movements may be influenced by responses to the release of the U.S. manufacturing sector activity report for December.