Dow falls more than 300 points Thursday as new jobs data renews inflation fears and sending most equities lower

MARKETS TODAY Jan 5 (Vica Partners)

DOW (^DJI) 32,930 (-340), S&P 500 (^GSPC) 3,808 (-45), Nasdaq (^IXIC) 10,305 (-154), Russell 2000 (^RUT) 1,754 (-19), NYSE FANG+ (^NYFANG) 4,290 (-112), Brent Crude $78.70/barrel (+$0.86), Gold $1,833/oz (-$21), Bitcoin 16.9k (+$15)

Session Overview

The Dow Jones Industrial Average fell 1.02% today, to close at 32,990.08. The best performing sector and only advancer was Energy, up 1.28% and rebounding from the last two sessions. The Real Estate and Utilities sectors had the biggest declines, down 2.16% and 1.92% respectively.

In economic news – the ADP job survey, private sector employment increased by 235,000 jobs in December and annual pay was up 7.3 percent year-over-year which came in much higher than analysts expected at 153.000. Also, Americans filing new claims for jobless benefits dropped to a three-month low last week. Most of the days employment data renewed inflation concerns and sent short term yields higher and most equities lower.

However, Federal Reserve Bank of St. Louis President James Bullard said interest rates are getting closer to a high enough level to bring down inflation. Tomorrow investors will be closely awaiting key jobs data.

Technicals/ Sector Performance/ Yields+

10 of 11 of S&P 500 Sectors were lower today;

The best performing sector and only advancer was Energy, up 1.28%. Communication services followed, down -0.53% with some cable and telecom stocks posting gains. Real Estate and the Utilities sectors were the biggest declines, down 2.16% and 1.92% respectively.

Yields up on the 2/ 5 year bonds with 10 /30 slightly declining: US – 2yr to 4.458%, 5yr to 3.915%, 10yr to 3.720%, 30yr to 3.79%

Greed Index Rating 44/ Fear-

U.S Economic News

  • ADP employment report; December saw the lowest pay growth since March 2022. Highlights the labor market is “fragmented” with small and medium sized business hiring creating just under 400k jobs which was offset by a decline of 151k at large companies. Leisure and hospitality added 123k jobs followed by professional services and education while transportation, mining and manufacturing saw declines.
  • Initial and continuing jobless claims; initial jobless claims declined to 204,000 in the week ended Dec. 31, which was the lowest level since September and below economists’ expectations of 230,000. Continued claims declined by 24,000 to 1.69 million, which was below estimates of 1.72 million.
  • Trade deficit; The U.S. trade deficit dropped by 21% in November to a 26-month low of $61.5 billion, Economists had forecast a $63.1.
  • S&P U.S. services PMI (final); the seasonally adjusted final S&P Global US Services PMI Business Activity Index registered 44.7 at the end of the year, down from 46.2 in November, but up slightly from the earlier released ‘flash’ estimate of 44.4.
  • Louis Fed President James Bullard; Federal Reserve Bank of St. Louis President James Bullard said interest rates are getting closer to a high enough level to bring down inflation, suggesting he’s comfortable with policymakers’ projections of how much further they will hike this year.

Other Asset Classes:

  • CBOE Volatility Index (^VIX): +0.45 to 22.46
  • USD index: +$0.89 to $105.13
  • Oil prices – Brent: +1.10% to $78.70, WTI: +1.22% to $73.73, Nat Gas: -9.90% to $3.759
  • Gold: -1.16% to $1,833.47, Silver: -2.44% to $23.23, Copper: +2.30% to $3.83
  • Bitcoin: +0.09% to $16.9k

In world news  

  • Tech firms leading job cuts in Corporate America Reuters
  • Hong Kong stocks are off to their best start since 2018 on China recovery hopes CNBC
  • US inflation has not ‘turned the corner yet’, top IMF official warns Financial Times

Vica Momentum Stock Report

Arcelormittal ADR (MT) $MT. (Momentum Grade B) (Value A+) (Growth B) 20 Day Average +4.24%, 50 Day Average 20.76%, 100 Day Average 9.45%

ArcelorMittal is the world’s leading steel and mining company. It is the leader in all the main sectors – automotive, household appliances, packaging and construction. ArcelorMittal’s steel-making operations have significant geographic diversification with roughly 38% of its crude steel produced in the Americas, 47% in Europe and around 15% in other countries.

 

 

Market Outlook

Market Outlook and updates posted at vicapartners.com

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