Stocks lost momentum Friday afternoon as investors digested more strong labor market data that will play into expectations for interest-rate cuts.
The Dow Jones Industrial Average (^DJI) edged down 0.1% or about 60 points. The benchmark S&P 500 (^GSPC) climbed 0.1% while the tech-heavy Nasdaq Composite (^IXIC) advanced 0.2%.
The major indexes wobbled both ways throughout the day after the release of the December US jobs report, which showed the US economy added 216,000 jobs in December, higher than the 175,000 expected by economists. The unemployment rate was unchanged at 3.7%.
Separate data from Institute for Supply Management (ISM) showed services activity slowed in December. Its services PMI for the month came in at 50.6, down from November’s reading of 52.7. While a reading above 50 indicates expansion, the December figure marked the lowest level for services activity since May.
Stocks have slumped in the first week of 2024 in a marked reversal of a roaring rally powered by high hopes the Federal Reserve will soon start easing monetary policy. But doubts have set in about whether policymakers are prepared to pivot.
Against that backdrop, US bond yields continued to rise, with the 10-year Treasury yield (^TNX) up 3.7 basis points to 4.04% after surging Thursday.
Elsewhere, iPhone supplier Foxconn (2354.TW) said it expects revenue to drop in the first quarter amid slower market demand. Apple (AAPL) shares slipped in afternoon trading, adding to losses after two analysts downgraded the iPhone maker on concerns about sales of its next smartphone.
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Stocks trending in afternoon trading
Here are some of the stocks leading Yahoo Finance’strending tickerspage during afternoon trading on Friday:
Peloton (PTON): Shares of the connected fitness company continued to climb on Friday afternoon, riding the momentum after the company announced a partnership with TikTok, in which Peloton content will be featured on a dedicated fitness hub on the social media platform.
Palantir (PLTR): Shares sank 2% after Jefferies downgraded the stock to "Underperform" from a "Hold" rating, while slashing its price target to $13 per share from $18. Jefferies Analyst Brent Thill writes that Palantir still has a long-term AI advantage through the trends of "AI euphoria."
Constellation: (STZ) — The parent company behind popular beer brands Modelo and Corona rose 2% Friday afternoon after reporting overall sales figures that fell below expectations for its fiscal third-quarter earnings, but posted boosted profits and sales growth for beer.
Costco (COST): Shares ticked up 1% after the warehouse retailer reported net sales increased close to 10% in last month, boosted by e-commerce sales growth of nearly 18%. Bank of America also reiterated its "Buy" rating on the wholesaler's stock.
Stocks mixed in afternoon trading
Investors tried to find solid footing during afternoon trading on Friday after the release of the December jobs report. The major indexes travelled in both directions earlier in the day before settling in mixed territory.
Near 12:30 p.m. ET the Dow Jones Industrial Average (^DJI) was down 0.2%, or about 75 points. The benchmark S&P 500 (^GSPC) climbed over the flatline while the tech-heavy Nasdaq Composite (^IXIC) advanced 0.1%.
"The December employment report continued to show a gradual cooling in the labor market that is more consistent with a soft landing than a recession," said Bank of America global research analysts in a note on Friday.
OpenAI aims for more licensing deals with publishers
The maker of the popular AI chatbot ChatGPT is in talks with dozens of publishers to license their articles, Bloomberg reported Thursday. The agreements would help the startup train its AI models while compensating publishers for the content they produce.
The effort to expand licensing deals comes as the New York Times filed a lawsuit against Microsoft (MSFT) and OpenAI over allegations of copyright infringement. The news outlet claims the AI companies engaged in wide-scale copying, hijacking the Times' journalism to train its AI chatbots. The lawsuit is the latest in a broader dispute over how courts should view the legality of training large language models using published works found on the web without permission or compensation.
While some publishers have already inked deals with OpenAI and other AI companies, the Times is among a class of creative outlets that have openly challenged how tech companies have gone about training their AI tools.
"We are in the middle of many negotiations and discussions with many publishers. They are active. They are very positive. They’re progressing well," Tom Rubin, OpenAI's chief of intellectual property and content, told Bloomberg. "You've seen deals announced, and there will be more in the future."
However these deals play out, advocates for individual creators have raised concerns that professionals on the smaller end of media production will be shut out of potential licensing agreements. And without intervention from Congress or the courts, work-for-hire artists have little recourse to challenge AI companies even when their work is ingested by large language models, said Rick Allen, the co-founder of Nautilus Productions, a boutique stock footage company and production house.
"It is telling that these negotiations by OpenAI, who jealously guards its own IP, recognize that other people’s content has value," he said.
Investors expect rate cuts even after hot jobs report
The labor market added 216,000 jobs in December, up from 173,000 in the previous month, and surpassing expectations from economists surveyed by Bloomberg, who had forecasted 175,000.
While at first glance the data reflects good news for workers and the businesses hiring them, the robust figures also complicate expectations for the Federal Reserve's interest rate policy for the months ahead.
"Friday’s jobs report was so strong that it likely delays the timing of the Federal Reserve’s eventual rate cuts," said Jeremy Straub, CEO of Coastal Wealth. "Clearly, the economy is strong enough as of now to withstand the Fed’s currently elevated interest rates."
For much of Wall Street, an end to the Fed's tightening campaign will be a victory for the economy, and specifically for investors who have been squeezed by higher interest rates, which increase the cost of borrowing and restrict growth.
The hot jobs report may have initially rattled expectations for rate cutting, but investors are still leaning towards the possibility that the Fed will cut rates at its March 20 meeting.
Investors are pricing in about a 74% chance of a rate cut after the March meeting, according to the CME FedWatch Tool.
Stocks edge higher after strong jobs report surprises Wall Street
Stocks opened slightly higher Friday as investors looked for direction after a strong jobs report rattled expectations for the Federal Reserve cutting interest rates.
The surprisingly hot jobs report could pressure the Fed to hold rates steady and delay its first rate cut, pushing away hopes that the tightening campaign has come to an end.
The Dow Jones Industrial Average (^DJI) rose just above the flatline. The benchmark S&P 500 (^GSPC) climbed 0.3%, while the tech-heavy Nasdaq Composite (^IXIC) advanced 0.2%.
US economy adds 216,000 jobs in December, sending stocks lower
The US economy added 216,000 jobs in December, while the unemployment rate remained unchanged at 3.7%, according to the Bureau of Labor Statistics.
Stocks moved lower after the report as traders scaled back bets on a rate cut from the Federal Reserve. All three indexes were down over 0.4% in premarket trading.
Treasury traders are standing firm behind wagers that the Federal Reserve will cut interest rates sharply in 2024, even as a bunch of employment and service-industry data whipsawed yields Friday.
Swap contracts tied to Fed meeting dates are again pricing in almost six quarter-point cuts and see a more than 70% chance of a quarter-point policy-rate decrease in March. While those bets pared following a job creation report that topped estimates and came with hot wages, the market quickly bounced as a deeper read into the payrolls report, large revision to November payrolls, and a soft reading on the US service sector emboldened traders.
Customers dine at Izakaya restaurants in the Ameyoko shopping street on July 27, 2023 in Tokyo, Japan. Japan's core consumer price index climbed by 3.3% in June, outpacing the US figure for the first time in eight years.
China led losses in Asia-Pacific on Thursday, followed by Japan stocks which resumed trading after an extended New Year's holiday during which the country witnessed an earthquake and an accident involving Japan Airlines.
China's CSI 300 index fell 0.92% to 3,347.05, while Hong Kong's Hang Seng index inched up 0.06% by the last hour of trading.
Japan's benchmark Nikkei 225 shed 0.53% to close at 33,288.29, but the broader Topix reversed losses to close 0.52% higher at 2,378.79, as Japan kicked off its first day of trade in 2024.
South Korea's Kospi ended down 0.78% at 2,587.02, and the small-cap Kosdaq fell 0.61% to 866.25.
In Australia, the S&P/ASX 200 retreated further, losing 0.39% to close at 7,494.1.
Stocks in India, however, bucked the trend, with the Nifty 50 index adding 0.7% after falling for two straight sessions.
On Friday in the U.S., all three major indexes lost ground after the Fed minutes revealed officials concluded that interest rate cuts were likely in 2024, though they appeared to provide little in the way of when that might occur.
Walgreens stock (WBA) was down about 12% Thursday on the news that the company is cutting its dividend by 48% to $0.25 a share from $0.48 a share for the fiscal first quarter of 2024.
New CEO Tim Wentworth, formerly the CEO of pharmacy benefits manager Express Scripts (CI), said the move was a difficult decision supported by the board and one that is necessary as the company moves forward on its strategy to revamp stores and double down as a retail giant.
That strategy is, for now, not pivoting entirely away from the focus on retail stores, Wentworth said.
The company reported that first quarter sales for the period ending Nov. 30, 2023, rose 10% year over year totaling $36.7 billion, beating Wall Street expectations. Walgreens also beat the Street's expectations for adjusted earnings with $0.66 per share, compared to consensus estimates of $0.62 per share.
The adjusted earnings per share was a result of a tax hit from sales of shares of Cencora, formerly AmeriSource Bergen. The company is maintaining its 2024 earnings guidance of $3.20 to $3.50 per share.
Walgreens, the second largest retail pharmacy chain, has recently made moves in healthcare services and clinical trial offerings, prompting speculation the company would mimic its rival CVS (CVS) and get into the insurance business, as CVS did by acquiring Aetna.
"I do not want to write insurance, I don't know why we would do that," Wentworth said.
"But I also don't want to turn away from the store. I think one of the mistakes in the narrative (is) that we are going to, or are, turned away from the store. I think what we have to do is use the store as the point of engagement," he told Yahoo Finance.
Wentworth said he is invigorated by the potential Walgreens has as a trusted healthcare brand. The pharmacy counter, he added, is where trust begins, as evidenced by the willingness of customers to "put a needle in their arm" or consult on medical needs. (Wentworth also said that COVID-19 vaccine volumes haven't been as low as expected in the quarter.)
This all comes at a time when retail healthcare is competing with traditional facilities like doctor's offices and hospitals — and also e-commerce giant Amazon (AMZN).
But Wentworth thinks there is still room to win the battle if he can redefine how the store operates. He sees three ways to do this:
Pare down. "We've got too much of an assortment, for sure," he said. "And that's inefficient for a lot of reasons. ... The national brands would start competing to be the one that's on our shelves alongside our own brand.
The Walgreens brand. Walgreens is in a great position to be trusted as a private label, but it needs to be repackaged, Wentworth said, and the pharmacists could help with sales by recommending Walgreens branded products as needed.
"Turning the store managers loose." Managers don't currently get paid based on store performance, but Wentworth wants to change that.
Turning managers loose? A Walgreens store in Boston. (AP Photo/Charles Krupa.) (ASSOCIATED PRESS)
International bright spot
Despite recent reports that Walgreens is looking to offload its UK chain, Boots, Wentworth said all options are still on the table. "I've got nothing to share on a decision, at all," Wentworth said, noting that it is one of the best-performing assets in the company.
But, he added, "Everything is on the table."
Walgreens was looking to unload Boots two years ago when market conditions weren't great, but that is no longer the case.
The international segment, meanwhile, performed well with first quarter sales of nearly $6 billion, or an increase of 12.4% year over year. Boots.com reported sales growth of 17.5%, accounting for 19% of Boots' total retail sales, Walgreens reported.
Anjalee Khemlani is the senior health reporter at Yahoo Finance, covering all things pharma, insurance, care services, digital health, PBMs, and health policy and politics. Follow Anjalee on all social media platforms@AnjKhem.
With the new year comes resolutions and, according to a recent poll, Americans have several things on their minds for 2024. YouGov found 34% of U.S. adult citizens plan to make New Year’s resolutions or set a goal for 2024. Adults under 30 - 52%- are the most likely to do so, followed by 30- to 44-year-olds at 44%. The numbers fall for those 45-to-64 years old (27%) and people 65 and older (18%
The most common resolution is saving more money: 23% are setting this goal. Other popular choices are being happy (22%), exercising more (21%), improving physical health (21%), eating healthier (20%), improving mental health (19%) or losing weight (19%). Low down on the list are getting a new job (9%) pursuing a new hobby (8%) or moving (7%).
Whatever your resolution, you may want to kick things off right on Jan. 1 and, if that involves a trip to the store for food or exercise equipment, you’re in luck. Walmart, the nation’s largest retailer, is open regular hours on New Year’s Day 2024.
For most locations, this means Walmart will be open 6 a.m.-11 p.m. Some services may have reduced hours, so check ahead with your location to confirm.
And what if you are on of the almost 60% of Americans who don’t make a New Year’s resolution? You’ll be glad to know you can stop in that day for candy and other treats and it’s likely on sale. The weight loss resolution can start Jan. 2 after all.
