Markets Struggle for Direction
U.S. stocks ended little changed on Wednesday as investors weighed mixed jobs data and a report suggesting that President-elect Donald Trump is considering declaring a national economic emergency on inflation.
- The Dow Jones Industrial Average rose 106.84 points (0.25%) to 42,635.20.
- The S&P 500 gained 9.20 points (0.16%) to 5,918.23.
- The Nasdaq Composite fell 10.80 points (0.06%) to 19,478.88.
Charlie Ripley, senior investment strategist at Allianz Investment Management, highlighted inflation as the key risk for 2025, noting the potential for factors to push inflation upward.
Fed Minutes Highlight Inflation Concerns
Minutes from the Federal Reserve’s Dec. 17-18 meeting revealed that officials are concerned about sticky inflation, exacerbated by potential policies under the incoming Trump administration.
The benchmark 10-year Treasury yield briefly peaked at 4.73%, its highest level since April 25, before retreating to 4.677% later in the day.
Trump’s Tariff Plans Weigh on Sentiment
Investor sentiment remained fragile following a CNN report indicating Trump’s plans to use the International Economic Emergency Powers Act to implement new tariffs.
Thomas Hayes, chairman of Great Hill Capital LLC, noted that if these tariffs are enacted, they could have a short-term inflationary impact, which may offset cuts in government spending.
Sector and Stock Performance
- Eight of the 11 S&P 500 sectors gained, led by healthcare (+0.53%).
- The Russell 200 Index tracking small-cap companies dropped 0.52%.
- Microsoft rose 0.52%, while Alphabet and Meta fell 0.79% and 1.16%, respectively.
Other notable stock moves:
- eBay (+9.86%) soared after Meta Platforms announced a partnership to showcase eBay listings on Facebook Marketplace.
- Edison International (-10.18%) dropped as its subsidiary cut power to prevent wildfire damage.
- Quantum-computing stocks plunged:
- Rigetti Computing (-40%)
- IonQ (-40%)
- Quantum Computing (-39%)
This followed Nvidia CEO Jensen Huang’s remarks that quantum computing is at least 30 years away.
Jobs Data Adds to Uncertainty
- The ADP National Employment Report showed private payroll growth slowed in December, while the Labor Department reported a decline in jobless claims.
- Investors now await the government’s December jobs report on Friday, with economists projecting 165,000 new jobs and an unchanged unemployment rate of 4.2%.
Federal Reserve’s Rate Strategy
The Fed has paused interest rate adjustments, with traders expecting the first rate cut in May or June, per the CME Group’s FedWatch Tool.
Fed Governor Christopher Waller expressed optimism about inflation trends in 2025, suggesting the central bank may gradually reduce rates further.
Market Breadth and Volume
- Declining issues outnumbered advancers by a 1.21-to-1 ratio on the NYSE and 1.98-to-1 on the Nasdaq.
- The S&P 500 posted 4 new 52-week highs and 29 new lows, while the Nasdaq Composite recorded 42 new highs and 116 new lows.
- Volume on U.S. exchanges totaled 15.86 billion shares, higher than the 12.29 billion average over the past 20 trading days.
Markets will remain closed on Thursday for a national day of mourning honoring the late President Jimmy Carter.