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Dow Jones Today: Stocks Rise, Treasury Yields Increase After Strong Jobs Report
By: Colin Ledley
Colin is a co-editor specializing in technology and finance news. He has over three years of experience in editing, reviewing, and fact-checking current financial events and politics. He holds a master’s degree in journalism from The New School and a bachelor’s degree in history and political science from McGill University.
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Updated on December 8, 2023
Main Stock Reports
Stocks managed to recover from early losses on Friday as investors considered how the Federal Reserve would react to a strong jobs report and rising consumer confidence when it meets next week.
NASDAQ, S&P 500, and the Dow Jones Industrial Average rose about 0.2% on Friday morning.
The U.S. added 199,000 jobs in November, more than economists expected, while the unemployment rate fell to 3.7% from 3.9%. The November numbers received a boost from the return of tens of thousands of auto workers and actors after strikes, but the positive surprise shows there’s still strength in the labor market.
Meanwhile, consumer confidence rose at the beginning of December as inflation expectations dropped to their lowest level since 2021, according to a report from the University of Michigan.
Friday’s reports add to the vast amount of economic data the Federal Reserve will consider in its upcoming policy meeting. The number of job openings fell to its lowest level since March 2021 in October, according to the Bureau of Labor Statistics. Their report on Tuesday also indicated that the number of job openings per unemployed person fell to 1.3 from a pandemic peak of two. On Wednesday, payroll company ADP said the private sector added 103,000 jobs, far below the 120,000 jobs economists had expected.
Stocks received a boost from big tech shares and chip manufacturers yesterday, with NASDAQ rising more than 1%, S&P 500 up 0.8%, and Dow up 0.2%.
Consumer Confidence Rises on Moderate Inflation Expectations
The Michigan Consumer Sentiment Index jumped 13% month-over-month to 69.4 in December with improved inflation expectations for the short and long term.
Consumer inflation expectations for the next year fell to 3.1%, the lowest since March 2021 and nearly back to pre-pandemic levels. In the two years before the pandemic, one-year inflation expectations ranged from 2.3% to 3%. Long-term inflation expectations decreased to 2.8% from 3.2% in the previous month.
The report’s authors stated that their survey showed “broad consensus of improved sentiment across age, income, education, geography, and political identity.”
RH Stock Hit by High Mortgage Rates
Shares of RH, the luxury furniture retailer formerly known as Restoration Hardware, fell 14% on Friday morning after the company cut its sales and margin guidance for the full year due to a slowdown in the housing market affecting furniture sales.
The company reported an adjusted net loss of $0.42 per share in the third quarter after earning $4.26 per share in the same period last year. Revenue fell 14% to $751 million, and operating margins dropped to 7.3% from 20.8% last year.
The company attributed the narrower margins to higher-than-expected expenses related to acquiring the New York hospitality property it is currently leasing and its failed attempts to acquire property in Miami Beach.
But
Sales were severely impacted by record mortgage interest rates that led to the freezing of the real estate market.
The company stated in its quarterly report: “With 82% of homeowners having loans below 5%, and 62% below 4%, we still expect the current real estate market to remain frozen until interest rates and/or home prices decline significantly.” The rates have dropped from a peak of around 8% in October, but they remain significantly higher than the current average homeowner rate.
Accordingly, the company narrowed its full-year sales guidance to a range of $3.06 billion to $3.08 billion from a previous estimate of between $3.04 billion and $3.1 billion. RH also lowered its full-year operating margin expectations to a range of 13.6% to 14%, compared to the previous quarter’s estimate of between 14.5% and 15.5%.
Stocks That Moved the Most Before the Market
Gains:
Carrier Global Corp. (CARR): Shares of the industrial machinery manufacturer rose 5% after it announced it would sell its security unit to Honeywell (HON) for $4.95 billion. Honeywell’s shares fell nearly 3%.
Advanced Micro Devices (AMD): Shares of the chipmaker rose more than 1%, adding to its nearly 10% gains the day before after launching the Instinct MI300 chip, which it claims will compete with AI leader Nvidia (NVDA).
Losses:
RH (RH): Shares of the luxury furniture manufacturer fell more than 8% after reporting worse-than-expected sales and earnings in the third quarter, citing weakness in the real estate market and rising costs. Docusign Inc. (DOCU): Shares of the electronic signature software provider fell more than 2% despite its quarterly earnings forecast and fourth-quarter sales guidance exceeding Wall Street expectations. Lululemon Athletic Inc. (LULU): Shares of the athletic apparel maker dropped 2% after its sales forecast for the last quarter of the year did not meet analysts’ expectations.
Futures Contracts for Stocks Decline on Job Reports
Futures contracts tied to the Dow Jones Industrial Average fell 0.3% in pre-market trading on Friday.
Contracts for the S&P 500 index also lost 0.4%.
Nasdaq 100 futures contracts dropped 0.7%.
Article Sources
Investopedia requires authors to use primary sources to support their work. These can include white papers, government data, original reports, and interviews with industry experts. We also reference original research from other reputable publishers when appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
University of Michigan. “Consumer Surveys, Preliminary Results for December 2023.”
RH. “Third Quarter 2023 Results and Shareholder Letter.”
RH. “Second Quarter 2023 Results and Shareholder Letter.”
Account Comparisons
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Michael Nagle / Bloomberg via Getty Images
Article Sources
Investopedia requires authors to use primary sources to support their work. These can include white papers, government data, original reports, and interviews with industry experts. We also reference original research from other reputable publishers when appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
University of Michigan. “Consumer Surveys, Preliminary Results for December 2023.”
RH. “Third Quarter 2023 Results and Shareholder Letter.”
RH. “Second Quarter 2023 Results and Shareholder Letter.”
Source:
https://www.investopedia.com/dow-jones-today-12082023-8413316
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