Day Traders Diary

1/10/25

The major averages took a hit today as the first monthly employment number of the new year came in hotter than expected dampening Wall Street's expectations for more interest rate cuts from the Federal Reserve this year.  The Dow Jones Industrial Average lost 696.75 points, or 1.63%, to 41,938.45. The S&P 500 slid 91 points or 1.54% to 5,827 while the Nasdaq Composite fell 317 points or 1.63% to 19,161. All three of the major averages posted back-to-back weekly losses, with the S&P 500 down 1.9%, the Nasdaq Composite fell 2.3% and the Dow Jones slid 1.8%.

U.S. payrolls grew by 256,000 in December, while economists polled by Dow Jones expected to see an increase of 155,000. The unemployment rate, which was projected to remain at 4.2%, fell to 4.1% during the month. The yield on the 10-year Treasury spiked to its highest level since late 2023 after the report closing at 4.74% up 5 basis points. The 2-year Treasury surged 10 basis points to 4.36%.

Odds of a March rate cut fell to 25% following the jobs data, down from a 41% probability a day earlier, according to the CME Fedwatch tool.

A second economic number from the University of Michigan's consumer sentiment index signaled concerns that inflation remains sticky. The overall index came in at 73.2 for January, missing a Dow Jones estimate of 74. Part of that was driven by one-year inflation expectations rising to 3.3% from 2.8%. Five-year expectations also scaled to their highest level since June 2008.

Not much was positive in the markets today. Higher interest rates are typically not good for tech stocks. Chipmaker Nvidia shed nearly 3%, while AMD and Broadcom were down 4.8% and 2.2%, respectively. Palantir was off by more than 1%, down around 15% from the December highs.

Small cap stocks, also sensitive to borrowing rates, dropped with the Russell 2000 index losing more than 2%.

In the commodity space, bitcoin, gold and oil were higher. Oil rose over 3% on sanctions against Russia and the strong economic data out of the US. The energy sector is the best performing sector year to date in the markets, 2%.