The S&P 500‘s remarkable 9-week winning streak could meet its match on Friday, January 5.
Despite reaching within 0.5% of its all-time high, recent market dynamics have shifted. The Federal Reserve’s pledge to initiate interest rate cuts in 2024 fueled optimism, propelling the index forward.
However, the start of 2024 hasn’t been as positive, with US equities dipping into the red. A significant Apple (NASDAQ: AAPL) stock sell-off and mixed Fed minutes data have contributed to the downturn.
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Today, the market faces another potential headwind as a new piece of economic data pushed Treasury yields higher, casting doubt on the possibility of a 10-week winning streak.
Why stocks may end this week in red?
US stocks remained flat at the opening bell on Friday after a hotter-than-anticipated jobs report raised fears that the Federal Reserve may keep rates higher for longer, and potentially delay the first cut.
Notably, the economy added 216,000 jobs in December, significantly above economists’ consensus expectations of 170,000. The reading was also notably higher than the 173,000 non-farm payrolls (NFP) reported for November.
The unemployment rate stuck to 3.7%, marking another indicator of continued strength in the labor market.
The stronger-than-expected jobs data, which was one of the main inflation catalysts in the past two years, could force the Fed to reconsider its plans for a dovish pivot and postpone the first of its cuts. Before today’s data, many investors were hoping that the central bank would begin trimming rates as soon as March, but those expectations will likely be dialed back after today.
Market reaction
The latest sign of a hot labor market sent Treasury yields surging on Friday, with the 10-year note climbing above 4% for the first time in nearly a month.
Meanwhile, the S&P 500 fell to 4,688 at the open, before recovering to 4,710. If the broader index remains in the green until market close, it will mark its 10th straight week of gains.
The price of spot gold rose 0.7% to $2,059, while the US dollar index fell 0.3% to 102.08.
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