Market Summary
The S&P 500 Index ($SPX), along with the Dow Jones Industrials Index ($DOWI), ended Wednesday in the red, declining by -0.34% and -0.94%, respectively. In contrast, the Nasdaq 100 Index ($IUXX) saw a slight increase of +0.06%. Futures for March E-mini S&P (ESH26) dropped -0.36%, whereas E-mini Nasdaq futures (NQH26) climbed +0.03%.
Stock Market Performance
Wednesday’s stock indexes showed mixed results, with the Nasdaq 100 achieving a 3.5-week high. The S&P 500 and Dow Jones saw declines, retreating from record highs mainly due to weakness in semiconductor and data storage sectors. Additionally, defense stocks faced downward pressure following President Trump’s statement against allowing dividends or buybacks for defense companies.
Interest Rates and Economic Indicators
Lower bond yields on Wednesday offered support to stock prices, influenced by negative signals from the US labor market. The latest Dec ADP employment report indicated fewer job additions than anticipated, and the Nov JOLTS report noted a decline in job openings. The yield on the 10-year T-note fell by -3 bp to 4.14%.
European Economic Data
Reports indicating a slower-than-expected rise in Eurozone core consumer prices helped alleviate inflation fears, causing European bond yields to decline. The UK 10-year gilt yield fell to a 1.75-month low, and the German bund yield dropped to a 1-month low. Signs of strength in the US services sector, signaled by the Dec ISM services index, which unexpectedly increased to 54.4, bolstered market optimism.
Upcoming Economic Focus
This week, the market is set to focus on crucial US economic updates, including anticipated increases in Q3 nonfarm productivity and initial weekly unemployment claims. On Friday, estimates suggest a growth of +70,000 in Dec nonfarm payrolls and a minor drop in the unemployment rate to 4.5%.
International Market Movements
Global markets showed varied performances on Wednesday. The Euro Stoxx 50 closed down by -0.14%, while China’s Shanghai Composite reached a 10.5-year high, gaining +0.05%. Meanwhile, Japan’s Nikkei Stock 225 decreased by -1.06%.
Sector Performance
Chip makers and data storage companies struggled, dragging down the broader market. Western Digital and Seagate Technology saw significant losses, while defense stock prices fell following regulatory comments from the President. Conversely, cybersecurity firms like Crowdstrike and Palo Alto Networks saw gains amid favorable market conditions.
