The markets showed a mixed picture on Thursday amidst investors analyzing jobs data and the Chinese economy. While the tech-heavy Nasdaq gained 0.8%, the broader S&P 500 rose a more modest 0.5% and the Dow Jones Industrial Average treaded water near the unchanged mark.

In other markets, the U.S. dollar lost ground and benchmark 10-year Treasury yields edged up slightly. Oil prices nudged upward as well, with U.S. crude settling just above $70 per barrel after hitting multi-month lows this week.

On the data front, jobless claims came in line with expectations while Chinese trade figures indicated a drop in imports.

Looking ahead, diversifying into reliable assets remains prudent even as riskier ones like Bitcoin slide. Steady gains from broad-based investments tend to win out over speculation in the long run.

U.S. stocks declined on December 6th, 2023 as fresh economic concerns resurfaced, dragging down major indices. The S&P 500 fell 0.4%, the Dow Jones shed 0.2%, and the tech-heavy Nasdaq dropped 0.6%.

Driving the risk-off mood was payroll data indicating further labor market weakness amid a murky outlook. Private payrolls grew less than expected in November per the ADP gauge, fueling doubts over the Fed’s rate cut path. Markets are currently betting on over 100 basis points of easing in 2023 despite strategists warning against overestimating.

Meanwhile, oil prices plunged to five-month lows as demand worries amplified. West Texas Intermediate (WTI) crude settled 4% lower at $69.38 per barrel. Brent crude dropped 3.6% to $74.30 as swelling supplies outweighed OPEC’s attempted cuts. So far this year, oil has dropped 4% unable to shake off the demand slump.

The risk-aversion was evident in the stock market as well, with the Dow, S&P and Nasdaq accompanies by small-caps like the Russell 2000 ending firmly in the red.

In summary, reservations about economic vitality especially demand levels weighed on stocks and oil prices. With uncertainty lingering over the Fed’s future policy approach, further volatility can’t be ruled out in the near-term.

U.S. stocks kicked off higher on December 6th, 2023, buoyed by investor expectations that the Federal Reserve could soon wrap up its interest rate hiking campaign. At the market open, the Dow Jones Industrial Average edged up 0.14%, while the S&P 500 and tech-heavy Nasdaq 100 climbed 0.26% and 0.39% respectively.

Driving the gains, Apple stock reclaimed its $3 trillion valuation milestone, showcasing the iPhone maker’s market resilience even amidst broader economic uncertainties. Meanwhile, video game retailer GameStop was also in focus, with its Q3 earnings report slated for release later in the day. The results could impact GameStop’s recently volatile share price performance.

On the commodities front, oil prices trended upwards after the OPEC+ nations decided to hold production cuts despite slackening demand. WTI crude futures rose near $72.41 per barrel, lending support to energy stocks.

As the trading session progresses, traders will closely monitor these developments and more for cues that could influence broader market direction. Any shifts in rate hike expectations or earnings surprises could spur intraday volatility across Wall Street benchmarks.

Fitch Ratings has downgraded the United States government’s credit rating, citing rising debt at the federal, state, and local levels and a “steady deterioration in standards of governance” over the past two decades. The rating was cut Tuesday one notch to AA+ from AAA, the highest possible rating. The new rating is still well into investment grade. The decision illustrates one way that growing political polarisation and repeated Washington standoffs over spending and taxes could end up costing US taxpayers. A lower credit rating, over time, could raise borrowing costs for the US government.

It’s only the second time in the nation’s history that its credit rating has been cut. In 2011, the ratings agency Standard and Poor’s stripped the US of its prized AAA rating after a prolonged fight over the government’s borrowing limit. The Government Accountability Office, in a 2012 report, estimated that the 2011 budget standoff raised Treasury’s borrowing costs by USD 1.3 billion that year. At the same time, the huge size of the US economy and the historic stability of the federal government has kept its borrowing costs low.

Global investors often flock to US Treasury securities during periods of economic turmoil, lowering the interest rate paid by the US government. Fitch had warned May 24 that it could remove the government’s triple-A rating as Congress again struggled to raise the borrowing limit. A deal was reached nearly a week later that suspended the limit and cut about USD 1.5 trillion from the government deficit over the next decade.

Fitch cited the worsening political divisions around spending and tax policy as a key reason for its decision. It said US governance has declined relative to other highly rated countries and it noted “repeated debt limit standoffs and last-minute resolutions.” Biden administration officials strongly criticised Fitch’s move. Treasury Secretary Janet Yellen said it was “arbitrary” and “based on outdated data.” Yellen noted that the US economy has rapidly recovered from the pandemic recession, with the unemployment rate near a half-century low and the economy expanding at a solid 2.4 per cent annual rate in the April-June quarter.

Fitch informed Biden administration officials that the January 6, 2021 insurrection was a factor in its decision to downgrade because it indicated an unstable government, according to a person familiar with the discussions between the administration and the rating agency. Fitch produced a report last year that showed government stability declined from 2018 to 2021, but increased since Biden assumed the presidency, said the person, who was granted anonymity to disclose private conversations.

Another factor in Fitch’s decision is that it expects the US economy to tumble into a “mild recession” in the final three months of this year and early next year. Economists at the Federal Reserve made a similar forecast this spring but then reversed it in July and said growth would slow but a recession would likely be avoided.

Wall Street is ticking higher Monday to start a week full of updates on where interest rates and profits for some of the stock market’s most influential companies are heading. The S&P 500 was 0.5 per cent higher in afternoon trading, coming off its eighth winning week in the last 10. The Dow Jones Industrial Average was up 221 points, or 0.6 per cent, at 35,446, as of 2:16 p.m. Eastern time, and the Nasdaq composite was 0.4 per cent higher.

Becton, Dickinson jumped 5.4 per cent for the largest gain in the S&P 500 after it said its updated Alaris infusion system will return to full commercial operations following earlier recalls. It received clearance from the US Food and Drug Administration for the system, which delivers medications and other products to patients. Chevron rallied 2.6 per cent after it gave an early look at its results for the spring, reporting a stronger profit than analysts expected.

Roughly 30 per cent of companies in the S&P 500 are scheduled to tell investors this week how they did from April through June. Key among them are three Big Tech behemoths that have grown so large that their stock movements often dictate where the S&P 500 goes. Alphabet, Meta Platforms and Microsoft will all report their results this week, and they’re three of the seven stocks that accounted for the majority of the S&P 500’s gain in the first half of the year. Each of the three has soared at least 35 per cent for this year so far, and they’ll need to deliver strong numbers to justify their big rallies.

The market’s top stocks have become so big and their movements so influential over the market that Nasdaq rebalanced its Nasdaq 100 index before trading began Monday, to lessen the impact some stocks have on the overall index. Perhaps even more important than how profits at the Big Tech titans go is what the Federal Reserve will say Wednesday at its latest meeting on interest rates. The wide expectation is that the Fed will raise its federal funds rate again, to its highest level since 2001, as it fights to bring inflation down. But the hope among traders is that will be the final increase of this cycle because inflation has been cooling since last summer.

High rates undercut inflation by slowing the entire economy in a blunt move, as well as by hurting prices for stocks and other investments. That caused many investors to brace for a recession, but the economy has so far remained resilient due largely to a remarkably solid job market. A report on Monday suggested the US services industry is continuing to grow, but at a slower pace than economists expected. On the upside for the economy, the preliminary report from S&P Global also suggested US manufacturing isn’t doing as badly as feared. Overall, growth in business activity during July appears to be at its slowest in five months.

Stocks have rallied hard this year on hopes the economy can continue to grow as inflation cools enough to get the Fed to not only stop hiking rates but to begin cutting them next year. Such a not-too-hot and not-too-cold outcome would mean the Fed pulls off a tricky “soft landing” for the economy. “A lot would need to go right for such an outcome, in our view,” strategists at BlackRock Investment Institute wrote in a report. Rate hikes take a notoriously long time to take full effect across the economy, and they can cause unanticipated parts of it to break.

The BlackRock strategists also warn profits may be under pressure in the second half of the year as increased wages for workers eat into profit margins. The big run for stocks in the S&P 500 this year also leaves them looking expensive compared with history, even outside the big seven stocks that have driven most of the gains, according to Doug Ramsey, chief investment officer of The Leuthold Group. He calls this “another chance to buy high” after the market’s rebound from the 2020 COVID crash.

Public Storage, which runs self-storage facilities, rose 0.9 per cent after it said it would buy Simply Self Storage for USD 2.2 billion from Blackstone Real Estate Income Trust. In the bond market, the yield on the 10-year Treasury was holding steady at 3.84 per cent. It helps set rates for mortgages and other important loans.

In markets abroad, European stocks were mixed after data suggested manufacturing and services industries across the continent are weaker than expected. The European Central Bank will meet on interest rates Thursday. In Asia, indexes were mixed. Stocks sank 2.1 per cent in Hong Kong and 0.1 per cent in Shanghai, but they were stronger in Tokyo and Seoul.

US stocks ended slightly higher on Monday, aided by gains in Amazon.com and other mega-cap growth shares, while persistent worries over inflation and interest rates kept a lid on the market.

Shares of Amazon.com Inc rose 2% and were the biggest positive for the S&P 500 and Nasdaq after it had  its shares 20 for 1.

Apple Inc shares climbed 0.5%. The tech giant at its annual software developer conference declared among other things that it would more deeply integrate its software into the core driving systems of cars.

Among sectors, consumer discretionary and communication services had the day’s highest gains.