Stock market news today: Stocks extend losses to start new year as Nasdaq slides over 1%

Josh Schafer and Karen Friar
Updated
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US stocks slid on Wednesday as optimism for fast interest-rate cuts waned amid fresh jobs data and minutes from the latest Federal Reserve meeting showed the timing of rate cuts remains uncertain.

The Dow Jones Industrial Average (^DJI) fell more than 0.7%, or 285 points, while the benchmark S&P 500 (^GSPC) slipped about 0.8%. The Nasdaq Composite (^IXIC) dropped nearly another 1.2% the day after a bruising session that saw tech stocks shed almost 1.6%.

Further signs of a cooling US labor market greeted investors on Wednesday. New data from the Bureau of Labor Statistics showed there were 8.79 million job openings at the end of November, the lowest level since March 2021. Economists surveyed by Bloomberg had expected 8.82 million openings.

Hopes that the year-end market rally would roll on into 2024 has taken a battering as stock indexes and bond prices sank in tandem for their worst start to a year in decades. Bonds headed lower for fourth day in a row, pushing the 10-year Treasury yield (^TNX) up near 4% before reversing course in the afternoon. The 10-year Treasury yield closed Wednesday at roughly 3.91%.

Read more: What the Fed rate-hike pause means for bank accounts, CDs, loans, and credit cards

Stocks were little changed after the release of the minutes from the most recent Federal Reserve meeting on Wednesday afternoon. The minutes revealed Fed officials believe "upside risks" to inflation have diminished.

"Almost all participants indicated that ... a lower target range for the federal funds rate would be appropriate by the end of 2024," the minutes said.

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  • Josh Schafer

    St.Lous Fed names Alberto Musalem new president

    The St. Louis Federal Reserve announced Alberto Musalem will be its new president and will assume the new role on April 2.

    Musalem replaces James Bullard, who left his post in August, and will serve as an alternate member of the rate-setting Federal Open Market Committee in 2024. Next year, the St.Louis Fed is set to be a voting member of the committee.

    Musalem was most recently the CEO, co-chief investment officer and co-founder of Evince Asset Management, a quantitative investment technology company. He previously served as the executive vice president and senior advisor to the president at the Federal Reserve Bank of New York.

    “Alberto will be an outstanding president and CEO of the St. Louis Fed,” said St. Louis Fed Director Carolyn Chism Hardy, president and CEO of Chism Hardy Investments LLC in Bartlett, Tenn., and deputy chair of the Bank’s search committee.

    “As an experienced economist, former Federal Reserve leader, collaborator and communicator, he comes with the exceptional technical expertise and leadership abilities needed to contribute to effective policymaking and advance a large organization in service to the public."

  • Josh Schafer

    Walgreens stock tumbles after quarterly results

    Walgreens (WBA) stock tumbled roughly 10% in early morning trade on Thursday after the company cut its dividend to 25 cents a share, a 48% decrease from its previous level.

    Yahoo Finance's Anjalee Khemlani reports:

    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 November 30, 2023, rose 10% year over year totaling $36.7 billion, beating Wall Street expectations. Walgreens also beat the Street on adjusted earnings per share with 66 cents per share, compared to consensus of 62 cents 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 guidance of $3.20 to $3.50 earnings per share.

    Walgreens, the second largest retail pharmacy chain, has recently made moves in health care services and clinical trial offerings, prompting speculation the company would mimic its rival CVS (CVS)—and get into the insurance business asCVS 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.

  • Josh Schafer

    Late 2023 winners lag to start 2024

    Stocks closed lower on Thursday as some of Wall Street's favorite sectors in December have lagged during Wednesday's trade.

    Broadly, the Dow Jones Industrial Average (^DJI) fell more than 0.7%, or 285 points, while the benchmark S&P 500 (^GSPC) slipped about 0.8%. The Nasdaq Composite (^IXIC) dropped nearly 1.2% after a bruising session that saw tech stocks shed almost 1.6%.

    The S&P 500 is now on its worst three-day stretch since October.

    Much of the market action has been counter to how stocks ended 2023. Real Estate fell more than 2% while the Russell 2000 fell more than 3%, its worst day since March 2023.

    Both the interest rate sensitive-sectors had soared in December amid investors' move to price in a Federal Reserve rate cut in March but have now given back some gains as the market tempers rate cut expectations.

  • Josh Schafer

    The Fed euphoria-fueled rally that finished 2023 may have put investors into an interesting conundrum.

    With so many market participants piling into risk-on areas of the market like the Russell 2000, Financials, and Real Estate to end last year, a resurgence of the 2023 tech trade in January could be the market's biggest pain trade to start 2024.

    "Anecdotally, we were hearing that from clients and from other sell-side firms that the equal-weighted index is likely to outperform and that's becoming overly consensus," Bank of America US equity strategist Ohsung Kwon told Yahoo Finance.

    Therefore, Kwon's team at BofA thinks the pain trade for markets could be if the recent shift to broadening in the market doesn't continue in January and the cap-weighted S&P 500 and Magnificent Seven rally in January.

    "We're not necessarily calling for megacaps to rally in 2024," Kwon clarified, though the firm still overall believes the equal-weighted S&P 500 and cyclicals will outperform.

    At this point, BofA is merely highlighting that what was once a tech-driven market consensus has clearly shifted and that could be a point to watch in the market action ahead.

  • Ines Ferré

    Oil gains more than 3% on supply disruption worries, OPEC promises unity

    Oil jumped on Wednesday following reports of a disruption at a major Libyan oil field, and a pledge for unity from the oil alliance OPEC.

    West Texas Intermediate (CL=F) settled at $72.70 per barrel. Brent (BZ=F) crude closed at $78.25 per barrel.

    The sharp rise comes after protests forced a shutdown of El Sharara, a site which produces 300,000 barrels per day. The disruption adds to heightened concerns over supply disruptions stemming from attacks in the Red Sea region.

    On Wednesday, Iran-backed Houthi rebels said they targeted a container ship headed towards Israel. The move comes after US Navy helicopters destroyed three Houthi boats on Sunday in response to a vessel hijack attempt on the Red Sea.

    The threat of a broader conflict threatening oil production from Iran has sent prices higher.

    "The real threat to prices is the Iranian oil exports (near 2 million barrels per day) that could suddenly be taken off the global market," Dennis Kissler, senior vice president at BOK Financial, said on Wednesday.

    Also on Wednesday, OPEC said its members "re-affirm their steadfast commitment to the shared objectives of unity and cohesion" within the organization.

    The latest output cuts announced last year by the Organization of Petroleum Exporting Countries and their allies were met with skepticism among market participants. Last month Angola said it was leaving the cartel over quota disputes.

  • Josh Schafer

    Fed minutes: Officials see 'diminished' inflation risks

    Federal Reserve officials appear increasingly confident that inflation was coming under better control to end 2023.

    "Participants saw upside risks to inflation as having diminished but noted that inflation was still well above the Committee’s longer-run goal and that a risk remained that progress toward price stability would stall," the release said.

    Additionally, participants viewed the current policy rate is "likely at or near its peak for this tightening cycle," but the actual path will depend on "how the economy evolves."

    Stocks were little changed following the release. The Dow Jones Industrial Average (^DJI) was down 0.3% while the benchmark S&P 500 (^GSPC) slipped about 0.4%. The Nasdaq Composite (^IXIC) dropped roughly 0.9% after a bruising session that saw tech stocks shed almost 1.6%.

  • Josh Schafer

    Trending tickers on Wednesday afternoon

    Sofi (SOFI) stock led the Yahoo Finance trending tickers page on Wednesday; shares slipped almost 13% as the financial services company was downgraded by KBW to Underperform from Market Perform. KBW analyst Mike Perito believes the recent surge in shares, which had been up nearly 30% in the last month, might be overdone.

    Xerox (XRX) shares fell more than 8% after the company announced it plans to cut 15% of its workforce as part of an overhaul of its operating model.

    Eli Lilly (LLY) shares popped almost 4% to hit its highest level in eight weeks. UBS listed Eli Lilly as a top pharma pick for 2024 on Wednesday citing upgrades to its weight-loss drug Mounjaro among other catalysts for the stock coming this year.

    AMC (AMC) stock hit an all-time low on Wednesday. Since its meme-stock fandom, the stock has struggled amid the reopening from the COVID lockdown and the Hollywood strikes. In 2023, AMC shares lost 83%.

  • Josh Schafer

    Real estate drags in Wednesday trade

    Interest rate sensitive sectors had ripped higher since the start of November as investors have increasingly bet on a soft landing.

    But as some doubt has crept into that narrative to start 2024, sectors like Real Estate (XLRE) that marched higher during the recent market rally are giving back some gains.

    Real Estate was the biggest laggard among the 11 sectors on Thursday, falling nearly 2% by 12:30 p.m. ET. The S&P 500 (^GSPC) was off about 0.7%.

    Source: Yahoo Finance
    Source: Yahoo Finance

    Notably, today's market action comes as investor bets on a interest rate cut in March have softened. Investors are placing a roughly 75% chance on a cut in March as of Thursday, per the CME FedWatch tool. That's down from the 90% chance investors saw a week ago.

  • Josh Schafer

    'Little hope' for manufacturing turnaround for now, economist says

    The December ISM manufacturing report released Wednesday showed the sector remained in contraction for the 14th consecutive month.

    Though, the index reading of 47.4 came in higher than month prior of 46.7 and above Wall Street's estimates for 47.1.

    But with the index just inching above its lowest level in six months, Jefferies US economist Thomas Simons doesn't see a turnaround happening yet.

    "The environment for capex investment remains very challenging due to high rates and uncertainty about the economy," Simons wrote in a note to clients on Wednesday. "The feint hope of rate cuts coming around the corner offers some upside risk for the sector going forward, but it is still a long way off from recovery."

    There were some bright spots in the report though, including a decrease in the prices paid component, a good sign for the fight against inflation, per economists.

    "The data show no strong signs of any change in the ongoing trend of goods disinflation," Simons wrote.

  • Ines Ferré

    Oil prices jump 3% on supply worries

    Oil futures rose more than 3% on Wednesday amid supply concerns following reports of a disruption to a major Libyan oilfield.

    West Texas Intermediate (CL=F) traded as high as $72.75 per barrel during the morning session. Brent (BZ=F) touched a session high of $78.29.

    Futures have been volatile over the last several sessions amid concerns of rising tensions in the Red Sea, which connects to the Suez Canal, a major pathway for shipments.

    On Tuesday oil wavered between positive and negative territory after Iran deployed a warship to the Red Sea.

    "The real threat to prices is the Iranian oil exports (near 2 mil bbls/day) that could suddenly be taken off the global market," Dennis Kissler, senior vice president at BOK Financial, wrote in a note to clients on Wednesday.

  • Josh Schafer

    Job openings hit lowest level since March 2021

    Job openings hit their lowest level since March 2021 in November, coming in lower than Wall Street expected and reflecting a continued cooling in the labor market to end 2023.

    There were 8.79 million jobs open at the end of November, a slight decrease from the 8.85 million job openings in October, according to new data from the Bureau of Labor Statistics released Wednesday. Economists surveyed by Bloomberg had expected there were 8.82 million openings.

    The report also showed the quits rate, a sign of confidence among workers, slipped to 2.2% down from 2.3% in the previous month. Additionally, the JOLTS report showed 5.5 million hires were made in the month, a slight decrease from the 5.9 million seen last month.

  • Josh Schafer

    Tech lags at the open

    Bond yields rose as tech stocks sank at the open on Wednesday, continuing a trend seen the day prior.

    The Dow Jones Industrial Average (^DJI) fell 0.3% while the benchmark S&P 500 (^GSPC) slipped about 0.5%. The Nasdaq Composite (^IXIC) dropped roughly 0.7% after a bruising session that saw tech stocks shed almost 1.6%.

    Meanwhile, Bonds headed lower for a fourth day, pushing the 10-year Treasury yield (^TNX) up near 4%.

    The moves comes after Tuesday brought one of the worst starts to the year for the Nasdaq since 1972.

  • Myles Udland

    Labor market comes into focus

    After a rough first day of trading, investor attention on Wednesday will turn to the labor market with the monthly update on job openings and turnover — known as the JOLTS report — set for release at 10:00 a.m. ET.

    A decline in job openings throughout 2023 served as an early indicator the US labor market was slowing, and Wednesday's data will serve as a key table-setter ahead of Friday's December jobs report.

    Expectations are Wednesday's report will show there 8.85 million jobs open at the end of November.

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