US Stocks Pull Back Ahead of Jobs Numbers – Dow Down 0.5%
US stocks retreated from recent record levels ahead of the key jobs numbers due later today. The Dow declined by 0.55%, the S&P 500 fell 0.19%, and the Nasdaq edged 0.18% lower as investors awaited the data and assessed its potential impact on the Federal Reserve. The dollar weakened significantly, with the Euro rallying in response. The DXY index dropped 0.61% on the day, closing at 105.71. US Treasury yields remained mixed ahead of the data, with the 2-year yield rising by 1.6 basis points to 4.141%, while the 10-year yield fell by 0.2 basis points to 4.178%.
Oil prices were stagnant, with Brent slipping by 0.08% to $72.25 and WTI losing 0.06%, closing the session at $68.50 per barrel. Gold prices experienced more movement, falling to the lower end of their recent range, finishing the day 0.68% lower at $2,632.95.
Non-Farms to Lock in Fed Cut
Investors are closely monitoring today’s key US employment data, with many expecting it to confirm a 25-basis-point rate cut by the Federal Reserve at its December meeting. Market consensus forecasts a 218,000 increase in non-farm payrolls for November, with the unemployment rate holding steady at 4.1%. Average Hourly Earnings are expected to show a 0.3% month-on-month increase.
With overall US inflation on track to fall within the Fed’s target range, the focus remains on wage inflation, which could jeopardise future rate cuts if it accelerates. On-target or lower-than-expected prints today should confirm the anticipated 25-basis-point cut in just over a week. However, stronger-than-expected figures could temper rate-cut expectations, leading to higher yields and a stronger dollar.
Calendar Focus on US Employment Today
The macroeconomic calendar today is dominated by the US employment data. Geopolitical risks have eased over the past few trading sessions, but traders will continue monitoring news wires for any developments.
Asian markets are expected to begin the day slightly lower, following Wall Street’s retreat from recent highs, with little on the economic calendar likely to shift market sentiment early on. Similarly, European trading is expected to start on a subdued note. However, the release of the US employment report for November is anticipated to alter market dynamics significantly once US trading begins.
Canadian employment data, also scheduled for release today, is expected to be largely overlooked as markets remain firmly focused on the implications of the US figures.
