Dow recovered 87, decliners over advancers 4-3 but NAZ was off 213. The MLP index stayed near 300 & the REIT index fell 1+ to the 392s. Junk bond funds slid lower & Treasuries saw more selling, raising yields (more below). Oil rose, going over 74, & gold added 14 to 2662.
Dow Jones Industrials
Online spending rose 8.7% during the holiday season from last year, according to data from Adobe Analytics, as deals & the use of AI-powered chatbots helped inspire purchases. Sales on retailers' websites & apps totaled $241B from Nov 1 - Dec 31. The company's analysis includes more than 1T visits to US retail sites, 100M unique items & 18 different product categories. More demand, not higher prices, drove higher online spending. Adobe's Digital Price Index found e-commerce prices have fallen every month for 27 months. The company's figures are not adjusted for inflation, but if they were revised, overall consumer spending would be higher. The e-commerce results are a promising sign for the retail industry, which has yet to report company-specific sales. Other early reads on the holiday season have looked strong, too. Retail sales for the holiday season in the US, excluding automotive sales, rose 3.8% year over year for the period of Nov 1 - Dec 24, according to Mastercard SpendingPulse, which measures in-store & online sales across payment types. Deep discounts motivated holiday shoppers to spend, according to Adobe’s data. For every 1% drop in the typical price, demand for merchandise increased by about 1% compared with the 2023 holiday season. That led to an additional $2.25B in online spending. Vivek Pandya, lead analyst for Adobe Digital Insights, said as prices of groceries & housing remain elevated, consumers are waiting to buy nonessential goods at times of the year when they expect to pay less. He described that pattern as “event-ized buying.” For example, he said shoppers have opened their wallets during Amazon's Prime Day event in the summer or during sales days such as President's Day & Memorial Day. “There are certain moments and certain opportunities where we see them overindexing their spend, really driving forward, because they see the value,” he added. “And then outside of those periods, we start to see growth kind of draw back down.”
Online holiday spending rises nearly 9%, fueled by deals and AI chatbots, Adobe data says
Treasury yields rose after economic data suggested services inflation is proving hard to tame. The 10-year Treasury yield climbed 6 basis points at 4.677% & the 2-year Treasury yield gained 3 basis points 4.299%. Yields & prices move in opposite directions & 1 basis point equals 0.01%. The moves came after the Dec ISM services price index came in at 64.4, up from 58.2 in Nov. Meanwhile, the Job Openings & Labor Turnover Survey (JOLTS) showed a higher-than-expected number of openings. The combination of rising prices & a high level of job openings could cause traders to dial back expectations for Federal Reserve rate cuts in 2025. ADP's private payrolls report will follow tomorrow is forecast to show that 130K jobs were added in Dec, before the Dec jobs report from the Bureau of Labor Statistics is expected Fri. That will include nonfarm payrolls data as well as the unemployment rate in the US.
10-year Treasury yield jumps after economic data points to sticky inflation
Job openings rose more than economists expected in Nov, but other signs of cooling in the labor market emerged as fewer Americans left their jobs & hiring continued to slow. New data from the Bureau of Labor Statistics showed there were 8.1M jobs open at the end of Nov, an increase from the 7.8M seen in Oct. The Oct figure was revised higher from the 7.7M open jobs initially reported. The forecast had expected the report to show 7.74M openings in Nov. The Job Openings & Labor Turnover Survey (JOLTS) also showed 5.3M hires were made during the month, down from the 5.4M made during Oct. The hiring rate fell to 3.3% from the 3.4% seen in Oct. Also, the quits rate, a sign of confidence among workers, fell to 1.9% from 2.1% in Oct. Oxford Economics lead US economist Nancy Vanden Houten described the release as consistent with a "no hire, no fire" labor market. The quits rate & hiring rate are now lower than they were before pandemic. These signs of slowing in the labor market have prompted Fed Chair Jerome Powell to describe the labor market as "looser than pre-pandemic." But he also noted that, for now, the labor market is cooling in a "gradual and orderly way." "We don’t think we need further cooling in the labor market to get inflation down to 2%," Powell said.
Job openings higher as hiring, quitting rates drop
Stocks reversed early gains as cautious investors weighed new economic data. Meanwhile, 10-year Treasury yield added roughly 7 basis points to hover just below 4.7%. Bets on when the Federal Reserve will next cut interest rates were pushed back, too. The Institute for Supply Management's manufacturing PMI indicated the manufacturing sector continued to expand last month, although the prices paid index jumped to a nearly 2-year high of 64.4, up from the prior 58.2. The surge in prices "is a worry for the Fed as it is consistent with PCE supercore inflation remaining at 3.5% until the middle of next year," wrote Capital Economics North America economist Thomas Ryan.
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