U.S. equities fell in the final session of the week after posting four-straight days of increases and notching solid weekly gains, as investors appeared to step back to reassess the rally, while also contemplating how the spreading coronavirus, which upended the markets last week, may impact the global economy. The moves came despite a stronger-than-expected January labor report. Treasury yields were lower, paring this week’s rebound, and the U.S. dollar was slightly higher, while crude oil prices were mixed and gold gained modest ground. In equity news, Activision Blizzard’s quarterly results exceeded forecasts, while Take-Two Interactive Software also bested the Street’s estimates, but announced the departure of a key executive. Europe and Asia finished lower.
The Dow Jones Industrial Average tumbled 277 points (0.9%) to 29,103, the S&P 500 Index was down 18 points (0.5%) to 3,328 and the Nasdaq Composite declined 52 points (0.5%) to 9,521. In moderate volume, 858 million shares were traded on the NYSE and 2.2 billion shares changed hands on the NASDAQ. WTI crude oil lost $0.63 to $50.32 per barrel and wholesale gasoline added $0.03 to $1.53 per gallon. Elsewhere, the Bloomberg gold spot price increased $4.06 to $1,570.72 per ounce, while the Dollar Index—a comparison of the U.S. dollar to six major world currencies—rose 0.2% to 98.69. Markets were solidly higher for the week, as the DJIA gained 3.0%, the S&P 500 Index rose 3.2% and the Nasdaq Composite jumped 4.0%.
Nonfarm payrolls rose by 225,000 jobs month-over-month (m/m) in January, compared to the Bloomberg forecast of a 160,000 increase. The rise of 145,000 seen in December was revised to a gain of 147,000 jobs. Excluding government hiring and firing, private sector payrolls increased by 206,000, versus the forecasted gain of 150,000, after rising by 142,000 in December, which was revised from the 139,000 increase that was initially reported. The job growth was led by employment gains in construction, health care, professional and business services, and leisure and hospitality, while employment declined in manufacturing. The upward revision to the prior two months was 7,000. The labor force participation rate ticked higher to 63.4% from December’s 63.2% rate.
The unemployment rate inched higher to 3.6% from December’s 3.5% rate, where it was forecasted to remain, while average hourly earnings were up 0.2% m/m, below projections of a 0.3% increase and compared to December’s unrevised 0.1% gain. Y/Y, wage gains were 3.1% higher, versus estimates of a 3.0% increase. Finally, average weekly hours remained at 34.3, in line with estimates.
December wholesale inventories were revised lower to a 0.2% m/m decline, versus expectations to remain at the preliminary estimate of a 0.1% dip, and compared to November’s upwardly-revised 0.1% gain. Sales were down 0.7%, following November’s 0.9% increase.
Consumer credit, released in the final hour of trading, showed consumer borrowing expanded by $22.0 billion during December, more than the $15.0 billion forecast of economists polled by Bloomberg. November’s figure was adjusted downward to an increase of $11.9 billion from the originally reported $12.5 billion. Non-revolving debt, which includes student loans and loans for vehicles and mobile homes, rose $9.4 billion, a 3.7% increase year-over-year (y/y), while revolving debt, which includes credit cards, rose by $12.7 billion, a 14.0% y/y rise.
Treasuries were higher, as the yield on the 2-year note was down 5 basis points (bps) at 1.40%, the yield on the 10-year note lost 6 bps 1.58%, and the 30-year bond rate was 7 bps lower at 2.05%.
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