2025-01-10 11:17

December US job growth beats expectations Walgreens set for best day since 1980 after Q1 profit beat Constellation Brands slides after trimming FY forecasts University of Michigan survey showed consumer sentiment dropped Indexes off: Dow 1.63%, S&P 1.54% and Nasdaq 1.63% Jan 10 (Reuters) - U.S. stocks sold off on Friday, with the S&P 500 erasing its 2025 gains, after an upbeat jobs report stoked fresh inflation fears, reinforcing bets that the Federal Reserve will be cautious in cutting interest rates this year. Wall Street's main indexes closed their second consecutive week in the red. "We started the year on the wrong foot," said Sam Stovall, market strategist at CFRA Research, commenting on the impact of a hotter-than-expected job data on equities. He added the environment for stocks could become "quite challenging." The Dow Jones Industrial Average (.DJI) , opens new tab fell 696.75 points, or 1.63%, to 41,938.45, the S&P 500 (.SPX) , opens new tab lost 91.21 points, or 1.54%, to 5,827.04 and the Nasdaq Composite (.IXIC) , opens new tab lost 317.25 points, or 1.63%, to 19,161.63. The domestically focused small-cap Russell 2000 index (.RUT) , opens new tab also fell 2.27%, slipping into correction territory as it was down 10.4% from its Nov. 25 closing high. Wall Street's fear gauge (.VIX) , opens new tab hit a three-week high on Friday. A Labor Department report showed job growth unexpectedly accelerated in December while the unemployment rate fell to 4.1% as the labor market ended the year on a strong note. A hotter-than-expected job gain could translate into faster economic expansion, leading to a rise in prices. To contain a still-elevated inflation, the Fed could be forced to take a more conservative stance on rate cuts this year. Traders see the central bank lowering borrowing costs for the first time in June and then staying steady for the rest of the year, according to the CME Group's FedWatch Tool. Brokerages also revised their Fed rate cut forecasts, with BofA Global Research forecasting a potential rate hike. However, Chicago Fed president Austan Goolsbee said there is no evidence the economy is overheating again, adding he still expects it will be appropriate to lower interest rates further. Pressuring stocks, the yield on the 30-year Treasury note touched 5% - its highest since November 2023, but slightly retreated to 4.966%. Most of the 11 S&P 500 sectors declined, except for the energy index (.SPNY) , opens new tab, which rose 0.34%. Adding to the dour mood, a University of Michigan survey showed consumer sentiment dropped to 73.2 in January from the previous month. Fresh inflation worries have taken the spotlight, compelling the Fed to issue a cautious forecast on monetary easing last month, as it anticipates policy changes on trade and immigration under President-elect Donald Trump, who is expected to take office in 10 days' time. On Jan. 15, investors will closely watch the release of the monthly consumer price index, which could spark further volatility if it comes in higher than expectations. "Markets would sell off meaningfully because all of a sudden the Fed is probably in a position not just to not cut rates and support markets, but to actually hike rates," said Bryant VanCronkhite, senior portfolio manager at Allspring. Chip stocks such as Nvidia (NVDA.O) , opens new tab dropped roughly 3%, weighed down by a report that the U.S. could announce new export regulations as early as Friday. Constellation Energy (CEG.O) , opens new tab soared 25.16% after agreeing to buy privately held natural gas and geothermal company Calpine Corp for $16.4 billion, while Constellation Brands (STZ.N) , opens new tab slid 17.09% after cutting its annual sales and profit forecasts. Walgreens Boots Alliance (WBA.O) , opens new tab jumped 27.55% after reporting an upbeat quarterly profit. Declining issues outnumbered advancers by a 4.24-to-1 ratio on the NYSE and by a 3.32-to-1 ratio on the Nasdaq. The S&P 500 posted 6 new 52-week highs and 32 new lows while the Nasdaq Composite recorded 39 new highs and 211 new lows. Volume on U.S. exchanges was 16.24 billion shares, compared with the 12.31 billion average for the full session over the last 20 trading days. Sign up here. https://www.reuters.com/markets/us/futures-drop-caution-ahead-key-payrolls-data-2025-01-10/

2025-01-10 11:15

A look at the day ahead in U.S. and global markets from Mike Dolan After a torrid start to the year for U.S. Treasuries and global sovereign bonds at large, Friday tests the 'hot economy' thesis by revealing just how tight U.S. labor markets still are as a new administration takes office in Washington this month. The release on Friday of the U.S. December employment report ties up a variety of jobs market updates this week - with something of a mixed picture so far. The weekly jobless series released on Wednesday was a standout, as it indicated the lowest unemployment claims in eight months. November job openings also rose. But private sector payroll growth missed forecasts and Thursday saw data showing both hiring and layoffs slowed last month. With the national payrolls report potentially a decider on all the above, consensus expectations are for jobs growth to have softened overall in December to some 160,000 - with an unemployment rate steady at 4.2%. If that pans out, the Federal Reserve will likely feel justified with a stance of further cautious rate cuts ahead. Its policymakers have indicated just two more quarter point reductions for this year, even though futures markets price marginally less than that - some 41 basis points as of Friday and with the first 25bp not coming until June. On Thursday, the latest Fed speakers tilted hawkish. Kansas City Federal Reserve President Jeff Schmid signaled a reluctance to cut interest rates again. "I believe we are near the point where the economy needs neither restriction nor support and that policy should be neutral," Schmid said. Fed governor and well-known hawk Michelle Bowman said she supported last month's interest rate cut as the "final step" in the central bank's monetary policy recalibration. With Thursday's market closures for the funeral of former President Jimmy Carter acting as something of a firebreak in an anxious first full trading week of the year, long-dated Treasury yields , remain elevated ahead of the payrolls report. At 4.94%, the 30-year 'long bond' yield is still stalking 5% for the first time since October 2023, while 10-year benchmark yields at 4.70% remain near this week's 8-month highs. Spurred in part by some extreme cold weather snaps across the Northern hemisphere, oil prices remain an aggravator and U.S. crude hit its highest since October. The dollar index (.DXY) , opens new tab also remains pumped up near the two-year high set last week. With Wall Street stock markets closed on Thursday, futures there are slightly in the red ahead of Friday's reopening. Of course the payrolls report addresses just one of the bond market concerns, with anxiety and uncertainty about the extent of President-elect Donald Trump's planned tax cuts, tariff hikes and immigration curbs still a wildcard. But to the extent that any or all of those policy promises are inflationary - in an already sticky inflation environment - the employment report sets the tone ahead of Trump's inauguration on Jan. 20. For stock markets, the focus on bonds may start to shift somewhat as the fourth-quarter earnings season gets underway - with S&P500 companies on aggregate expected to have clocked 10% profit growth last year and analysts pencilling a further 14% gain in 2025. Delta Airlines, Walgreens Boots Alliance and Constellation Brands kick off the reporting season on Friday - with the big banks due next week. For tech companies there was good news from Taiwan, with the world's largest contract chipmaker TSMC (2330.TW) , opens new tab reporting fourth-quarter revenue that easily beat forecasts as it reaped the benefit of artificial intelligence demand. Overseas, the bond market ructions have rippled across the world this week too - with Britain's government bond market in the crosshairs as 30-year gilt yields there hit 27-year highs and 10-year benchmarks reaching levels not seen since 2008. Even though those gilt yield rises are largely just in line with what's happened in U.S. Treasuries a worrying development in the UK is that sterling , has turned tail too and stopped following domestic yields higher. Gilts remained on edge first thing Friday, but yields remained below the week's peaks and the pound recovered some ground from Thursday's 14-month low against the dollar. Stocks in Asia were under pressure, with the main Chinese (.CSI300) , opens new tab and Japanese (.N225) , opens new tab indexes down more than 1% each. Inflation numbers from China on Thursday showed the country still battling pervasive deflationary pressures. China's central bank is expected to deploy this year its most aggressive monetary tactics in a decade as it tries to stimulate the economy and soften the blow of impending U.S. tariff hikes - but in doing so it risks exhausting its firepower. Friday's announcement by the People's Bank of China that it has suspended treasury bond purchases due to the asset's scarcity highlighted the limitations of its resources as it confronts an increasingly challenging economic environment. Key developments that should provide more direction to U.S. markets later on Friday: * US December employment report, University of Michigan January consumer sentiment survey, Canada Dec employment report * US corporate earnings: Delta Airlines, Walgreens Boots Alliance, Constellation Brands * Britain's finance minister Rachel Reeves will visit China Sign up here. https://www.reuters.com/markets/us/global-markets-view-usa-2025-01-10/

2025-01-10 11:10

Latest US consumer price index due on Jan 15 Rising global yields keep investors eyeing bond market Stocks sink, yields jump after blowout jobs data Uncertainty over impact of Trump's policies fans inflation fears Major US banks due to report Q4 results in coming week NEW YORK, Jan 10 (Reuters) - U.S. inflation data in the coming week could test the nerves of stock investors and further inflame worries about rising Treasury yields and uncertainty over Donald Trump's policy plans. After back-to-back standout years, the stock market has wobbled out of the gate in 2025, with the benchmark S&P 500 (.SPX) , opens new tab down about 1% so far this year. A revival of inflation is seen as one of the key risks facing equities, with the Federal Reserve already pulling back on its projected interest rate cuts because it expects inflation to rise at a faster pace than it had previously anticipated. Markets pushed out expectations for a next rate cut until June after a blowout U.S. jobs report on Friday, with stocks falling sharply and Treasury yields hitting fresh milestones following the December employment data. The monthly consumer price index, due on Jan 15, is among the most closely watched inflation measures and could spark further market volatility if it comes in higher than expectations, investors said. Monthly inflation data can have an "outsized presence in the market," said Marta Norton, chief investment strategist at retirement and wealth services provider Empower. "If we were to see inflation re-accelerate, that would be concerning to markets," Norton said. "There's just this kind of pins and needles moment with every inflation print." Focus turned to the inflation data following the surprisingly strong employment report for December. Payrolls soared by 256,000, well above the 160,000 estimate, while the unemployment rate fell to 4.1%. The strong jobs growth "has added to the uncertainty about the trend in inflation, as well as the prospects for the Fed to cut interest rates in 2025," said Sam Stovall, chief investment strategist at CFRA. The December CPI is expected to show a 0.3% increase on a monthly basis, according to a Reuters poll. While the Fed was confident enough that inflation had moderated to start cutting interest rates in September, the pace of annual inflation has remained above the Fed's 2% target. The Fed now projects inflation will rise 2.5% in 2025. Minutes from the Fed's latest meeting, released on Wednesday, showed officials also worried that Trump's policies on trade and immigration could prolong the effort to bring down inflation. The Fed is widely expected to pause its rate-cutting cycle at its next meeting at the end of the month, but firmer-than-expected CPI data could push back market projections for further easing even later in the year. Given "looming questions" about fiscal policy and potential tariffs, "if the inflationary picture that we have absent those risks is also moving in the wrong direction, I think that might challenge market expectations," said Matt Orton, chief market strategist at Raymond James Investment Management. A hot CPI number also could further lift Treasury yields and have broad fallout. A selloff this week in government bonds around the world, which included 10-year UK gilt yields hitting their highest level since 2008, sent ripples through financial markets. Yields rise when bond prices fall. Following the jobs data, the benchmark 10-year Treasury yield hit 4.79%, its highest level since November 2023. Higher yields can pressure stocks in several ways, including raising borrowing costs for consumers and companies. A rise in Treasury yields can improve the attractiveness for lower-risk bonds, increasing investment competition for equities. The CPI data headlines a busy few weeks for markets. Earnings results from major banks such as JPMorgan (JPM.N) , opens new tab and Goldman Sachs (GS.N) , opens new tab in the coming week kick off fourth-quarter reports for U.S. companies. S&P 500 company earnings are expected to have climbed nearly 10% in the quarter from a year earlier, according to LSEG IBES. President-elect Trump will also take office on Jan. 20. Investors are bracing for quick action from his administration in areas such as tariffs on imports from China and other trading partners, as well as stricter controls on immigration. Speculation about Trump's plans is already jostling markets. For example, the dollar fell and European stocks rose after a Washington Post report this week said Trump's aides were exploring tariff plans that would only cover critical imports. Trump denied the report. "We are still waiting to understand the strength of the bite with Donald Trump’s bark," said Bryant VanCronkhite, senior portfolio manager at Allspring Global Investments. Wall St Week Ahead runs every Friday. For the daily stock market report, please click Sign up here. https://www.reuters.com/markets/us/wall-st-week-ahead-inflation-report-could-rattle-markets-after-bond-yields-climb-2025-01-10/

2025-01-10 11:03

Promising pipeline of anticipated initial public offerings Large IPOs expected to dominate, appealing for liquidity and strong performance Tech companies may attract investors despite smaller size, says Goldman Sachs CFO NEW YORK, Jan 10 (Reuters) - Investment bankers are gearing up for a pickup in dealmaking activity in global equity capital markets this year, buoyed by a promising pipeline of anticipated initial public offerings of several high-profile companies. Liquefied natural gas producer Venture Global, privately held medical supply giant Medline, and cybersecurity company Sailpoint, backed by private equity firm Thoma Bravo, are expected to headline a crowded line-up of stock market flotations in the first half of 2025, according to people familiar with the matter. An increase in capital markets activity, driven by improving economic confidence, is expected to be a major boon for several of these private equity-backed companies. Private equity firms have been struggling to sell or list portfolio companies over the past two years due to high interest rates and volatile stock markets that put a chill on dealmaking. "Many of the companies owned by private equity firms have become sizeable," said Arnaud Blanchard, global co-head of equity capital markets for Morgan Stanley. "Sponsors know it may take a while to complete a full exit, so they are becoming active now, early in the cycle." Other buzzy names that could potentially go public in the U.S. this year include the likes of Swedish payments firm Klarna, artificial intelligence cloud platform CoreWeave, and financial technology firm Chime, which confidentially submitted paperwork for its flotation in December, the sources said. The largest private equity firms have become more bullish about IPOs of their portfolio companies in recent months.When major U.S. banks report earnings next week, investors will focus on the outlook for capital markets, which had a surge of activity last year. Global equity issuance rose 20% last year, but stock market launches have so far lagged that increase, remaining far below their 2021 peak. IPOs raised $123 billion last year, compared with a record-breaking haul of $594 billion in 2021, according to Dealogic. Moreover, Wall Street's most-watched gauge of investor anxiety, the Cboe Volatility Index (.VIX) , opens new tab, is currently at a relatively low level of about 18, raising expectations of a near-term upswing in capital markets. LARGER DEALS Bankers are expecting more large IPOs, which typically refer to share sales worth $750 million and above, and are appealing because they often feature established companies with strong financial performance and offer greater liquidity to investors. “IPOs, on average, are likely to be larger in size perhaps than they ever have been," Brian Friedman, president of Jefferies, told Reuters in an interview. Bankers also expect the 2025 surge in IPOs to reach across a broad swathe of sectors. "Investors continue to favor scaled, profitable companies with sensible balance sheets and durable cash flows, especially as rates may be staying higher for longer," said Matt Warren, Bank of America's head of Americas equity capital markets cash origination. While valuations have risen, many startups backed by private equity firms are still falling short of their targeted returns, said JPMorgan Chase president Daniel Pinto. "A lot of the companies in the sponsor books, even with these valuations, are not able to produce a good enough exit for these investments," he said. “Private equity firms can unlock value in several ways, including small stake sales in IPOs, which can then be used for a strategic sale with a premium." Tech companies may buck the trend, attracting demand from investors even if they are smaller in size, Goldman Sachs Chief Financial Officer Dennis Coleman said during the firm's financial conference in December. The Wall Street investment banking giant has a "substantial tech pipeline" of IPOs and expects to see offerings for fast-growing companies to rebound after strong performances from recent small and mid-cap tech IPOs. Sign up here. https://www.reuters.com/markets/us/bankers-hope-ipo-revival-2025-high-profile-listings-stack-up-2025-01-10/

2025-01-10 10:55

Jan 10 (Reuters) - U.S. investors pulled out of equity funds and moved to the safety of money market funds in the week to Jan. 8 driven by uncertainties about the Fed's interest rate trajectory and looming tariff policies by the incoming Trump administration. Investors divested a net $5.05 billion worth of U.S. equity funds during the week and acquired a robust $56.19 billion worth of money market funds in their largest weekly net purchase since Dec. 4, 2024, according to LSEG Lipper data. The U.S. Federal Reserve's Dec. 17-18 meeting minutes, released Wednesday, revealed officials' growing concerns about persistent price pressures and the potential impact of policies by the incoming Trump administration. Investors withdrew a net $4.88 billion from U.S. large-cap funds, compared with $5.43 billion worth of net purchases the previous week. Mid-cap and multi-cap funds also had outflows totaling $1.2 billion and $751 million, respectively, but small-cap funds gained $272 million worth of inflows. Sectoral funds were mixed, with industrials facing a notable $467 million worth of outflows, while communication services and tech had net $348 million and $338 million, respectively, in inflows. Bond funds, meanwhile, eked out a net $9.14 billion worth of weekly inflow following three consecutive weeks of net sales. General domestic taxable fixed income funds were popular as investors poured $3.52 billion, the highest in nearly a year, into these funds. Short-to-intermediate investment-grade funds, loan participation funds, and short-to-intermediate government and treasury funds, also saw a significant $2.62 billion, $2.17 billion and $2.02 billion worth of net additions, respectively. Sign up here. https://www.reuters.com/markets/us/us-equity-funds-see-outflows-caution-over-fed-policy-uncertainty-2025-01-10/

2025-01-10 10:55

Jan 10 (Reuters) - Russian President Vladimir Putin promised Slovakia that Russia's Gazprom would find alternative ways to deliver contracted gas to Slovakia after the end of transit through Ukraine, Slovak Prime Minister Robert Fico said on Friday. Fico met Putin in Moscow on Dec. 22 to discuss gas and the war in Ukraine after Ukraine decided not to allow Russian gas flows through Ukraine from Jan. 1. Fico has threatened to take retaliatory measures against Kyiv as Slovakia wanted to continue receiving Russian gas through Ukraine to keep costs down and keep earning transit country revenue from onward gas shipments to Europe. "I spoke to Putin about a contract between us and Gazprom, which says that they have to somehow deliver the gas to us," Fico told a parliamentary committee. "We are able to push something through the southern flow (route through Turkey), but so far we have storage, Slovak consumption is secured." Fico said Putin guaranteed that Russia would meets its obligations, although capacity in the TurkStream pipeline and connecting route taking Russian gas through Turkey to Europe was limited. "President Putin guaranteed that they will honour their commitments," Fico said. Part could be delivered through western Europe, Fico said, referring to Slovakia's pipeline connections to gas networks of central and west European neighbours. Fico has argued Europe suffered multi-billion euro losses from a rise in gas prices caused by the absence of around 13.5 billion cubic metres of gas that flowed through Ukraine last year, including around 3 bcm for Slovak consumption. Fico said an agreement had been close to continue shipments through Ukraine with Russian gas changing ownership before entering Ukraine under an agreement involving Azerbaijan or the Slovak gas importer SPP, but Ukraine President Volodymyr Zelenskiy rejected extending any gas flows through Ukraine at the EU's December summit. Sign up here. https://www.reuters.com/world/europe/putin-has-promised-keep-supplying-slovakia-with-gas-fico-says-2025-01-10/