Stocks and Oil Decline After Slowing Job and Wage Growth in November
Stocks and oil prices fell on Wednesday after data showed that job and wage growth slowed more than expected in November.
The Nasdaq Composite dropped by 0.6%, while the S&P 500 fell by 0.4% and the Dow Jones Industrial Average lost 0.2%.
Oil prices fell due to concerns over a slowing U.S. and global economy. The yield on the 10-year Treasury note dropped to below 4.15%, its lowest level since early September.
Job and wage growth significantly slowed in November, according to data from private payroll provider ADP. The company’s National Employment Report indicated that the private sector added 103,000 jobs last month, down from the total in October and 25,000 jobs below expectations. Those remaining in their jobs saw an increase in their wages of 5.6%, the lowest increase since September 2021.
Midday Stock Movements
Dow Index:
- Shares of Walgreens Boots Alliance (WBA) rose by 4.3% after recovering from a 25-year low last week.
- Boeing (BA) shares gained 1.2% following reports that it delivered 46 737 narrow-body planes last month, putting it on track to meet its full-year delivery target.
- Disney (DIS) shares increased by 0.8% after SAG-AFTRA union members approved the contract negotiated during a 118-day strike earlier this year.
- McDonald’s (MCD) shares recovered from early losses to end the day up 0.1% after announcing at its investor day that it plans to open 9,000 new restaurants by 2027.
- American Express (AXP) shares fell by 1.9% after CEO Stephen Squeri commented in response to a question suggesting that American Express could replace Goldman Sachs as a partner for the Apple credit card, saying that American Express’s “primary card base” was a barrier to collaborating with some companies that have broad consumer bases. Apple (AAPL) shares declined by 0.6%.
S&P 500 Index:
- Campbell Soup (CPB) led the S&P 500 with a 7.1% increase after reporting quarterly earnings that surpassed Wall Street expectations due to price increases offsetting lower sales volume.
- Delta Air Lines (DAL) shares rose by 3.5% after reaffirming its full-year guidance and projecting strong demand for the holiday season. The promising forecasts also lifted shares of other travel companies, with United Airlines (UAL) shares up 3.4%, Carnival Corp. (CCL) shares rising 5.9%, and Norwegian Cruise Line Holdings (NCLH) and Royal Caribbean (RCL) shares up 3.4%.
- CVS Health (CVS) shares increased by 3.5%, adding to gains from the previous day thanks to its 2024 forecast and new business initiatives.
- Citigroup (C) shares rose by 2.5% after reaffirming its full-year guidance for 2024 despite declining trading revenues. CFO Mark Mason also noted that the bank’s restructuring is expected to be completed in the first quarter of next year.
- Brown-Forman (BF.B) led declines in the index, dropping by 10.4% after the Jack Daniels whiskey maker cut its full-year sales and profit forecasts.
- Shares of Constellation Energy Corp. (CEG) fell by 4.8% as natural gas prices dropped. Energy stocks were lower on Wednesday, with Marathon Petroleum (MPC), Halliburton (HAL), and Marathon Oil (MRO) shares all declining by more than 3%.
- Shares of cigarette maker Altria (MO) fell by 2.8% after rival British American Tobacco announced it would reduce the value of its brands in the U.S. by nearly $32 billion due to economic pressures and weak demand.
Index
NASDAQ 100:
- Shares of Lucid Group (LCID) rose by 5%, recovering from losses incurred the previous day after cutting prices for its cheapest model of luxury electric vehicles.
- Shares of Old Dominion Freight Line (ODFL) fell by 5.5% after announcing that its revenues declined year-over-year in November due to a slowing U.S. economy impacting shipping loads.
- Shares of Advanced Micro Devices (AMD) dropped by 1.3% after revealing its new Instinct MI300X “accelerator chip,” a graphics unit claimed to run artificial intelligence software faster than products from rival Nvidia.
- Shares of Nvidia (NVDA) declined by 2.3% as tech giants Microsoft (MSFT) and Meta (META) announced they would be using AMD’s new chip.
Asana Warns of Weak Renewals; Shares Plummet
Shares of Asana Inc. (ASAN) fell by 16% on Wednesday after the work management software maker warned it is facing tough economic conditions as customers tighten their spending.
The overall economic conditions affected the company’s renewal base, according to officials during the company’s earnings call after the close on Tuesday. However, they noted that Asana is seeing signs of stability in new business.
The market’s negative reaction on Wednesday came despite the company posting better-than-expected results and providing strong guidance. Even though Asana’s shares dropped on Wednesday, they are still up more than 45% for the year.
Energy Stocks Decline as Oil Prices Fall
Energy was the worst-performing sector on Wednesday, dropping nearly 1.5% in the afternoon as oil and gas prices declined due to demand concerns.
Natural gas contracts fell by 5% on Wednesday, leading to a 4% drop in shares of Constellation Energy Corp. (CEG). Shares of oil refiner Marathon Petroleum Corp. (MPC) declined over 3% as the price of U.S. oil fell by 4% and gasoline prices dropped to their lowest level since January. Halliburton (HAL) shares fell by 3%.
British American Tobacco Hits 13-Year Low After $31 Billion Loss
Shares of British American Tobacco (BTI) fell more than 8% on Wednesday to their lowest level since 2010 after the cigarette maker announced it would write down the value of its brands in the U.S. by £25 billion ($31.5 billion).
The maker of Camel and Lucky Strike cigarettes and others explained that in the U.S., “the ongoing economic pressures and the proliferation of modern illicit disposable devices continue to impact the size of the cigarette industry in the second half of the year.”
As a result, BAT indicated that it plans to accelerate the company’s transformation away from selling conventional cigarettes and encourage customers to switch to other tobacco products.
The company noted that as a result of all these changes, revenue and profit growth are expected to be in the low single digits in 2024, with a gradual improvement in revenue growth of 3% to 5% and mid-single-digit profit rises by 2026.
Oil Prices Drop to 5-Month Low
Oil contracts fell to their lowest level since July on Wednesday. West Texas Intermediate contracts decreased by 4% to around $69.50. Brent prices, the European benchmark, fell by 3.6% to below $75.
Oil prices have declined over the past two months despite OPEC+ efforts, which announced bold production cuts late last month. Fears of demand amid a slowing U.S. and global economy contributed to this decline, along with doubts about OPEC+ members’ commitment to production cuts.
The decline in oil prices has led to a reduction in fuel prices in the United States. According to data released by the Energy Information Administration on Monday, gasoline prices fell to $3.23 per gallon, the lowest level since January. They dropped to $3.22 per gallon on Wednesday according to AAA.
Early Stock Moves
Gains:
- Nio Inc. (NIO) shares of the Chinese electric vehicle manufacturer rose by more than 2% following reports suggesting that the company might spin off its battery production unit by the end of the year.
- Shares of Advanced Micro Devices (AMD), the chip manufacturer, rose by more than 1% ahead of the launch of the new Instinct MI300 chip, a graphics processing unit designed to compete with Nvidia chips, which most artificial intelligence applications rely on.
- Nvidia (NVDA) shares rose by about 1% after CEO Jensen Huang stated that the company would develop new chips compatible with U.S. restrictions on exporting advanced semiconductors to China.
Losses:
- Shares of British American Tobacco Industries (BTI) fell by more than 9% after the company announced it would impair the value of its brands in the U.S. by $31.5 billion.
- Shares of MongoDB Inc. (MDB), the cloud software company, declined by 5% after it reported its quarterly results. The results were better than the announced expectations, but the stock’s 120% increase this year set a high bar for the stock.
Stock Futures Rise with Data Indicating Slower Job and Wage Growth in November
Stock futures tied to the Dow Jones Industrial Average were up 0.1% about an hour before markets opened.
S&P 500 futures rose by 0.2%.
Nasdaq 100 futures indicated a 0.3% rise for the tech-heavy index.
Source: https://www.investopedia.com/dow-jones-today-12062023-8411303
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