ISM and JOLTS Data, Fed Meeting Minutes Ahead

January 3, 2024

Photo by Kelly Sikkema on Unsplash

It looks like the recent whispers about Technology being overbought turned into an actual conversation yesterday as the sector traded off 2.62%. That’s a fair-sized number but when you consider the market capitalization represented in the sector it should be no surprise that broad market indexes suffered. Aside from the Dow which posted a 0.07% gain, the S&P 500 was down 0.57%, the Nasdaq Composite fell 1.63% and even the Russell 2000 gave up 0.70%. It wasn't all gloom and doom as Consumer Staples (1.12%) Utilities (1.45%) and Healthcare (1.76%) had a good day, but it was not enough to counter Technology and Communications Services, which also fell 0.56%.

ISM and JOLTS Data, Fed Meeting Minutes Ahead

US equity futures point to a lower open later this morning. Treasury yields, including those for the closely watched 10-year, are moving higher again this morning ahead of this morning’s December ISM Manufacturing PMI data and the November JOLTS Job Openings Report. Those back-to-back reports out at 10 AM ET will give the market a fresh look at the vector and velocity of the US economy. Following yesterday’s December Manufacturing PMI from S&P Global that found selling prices increased at the fastest rate since April, investors will be engrossed in findings from ISM on inflation and manufacturing activity. Even though the November JOLTS data is a bit of a rear-view perspective, the number of job openings reported will indicate the vitality of the jobs market and wage pressures.

Those morning reports will set the tone for the 2 PM ET publication of the Fed’s December policy meeting minutes. Exiting that meeting the Fed shared its updated economic projections that call for three rate hikes in 2024, half what the market is expecting. The meeting minutes will give us a behind-the-scenes look at that Fed rate cut conversation and could reveal what could spur the Fed to cut rates more aggressively or go at a slower pace. Recent Fed head comments have suggested the Fed may not begin cutting rates until 2H 2024. Should the meeting minutes reinforce that view and the December ISM report confirm slower-than-expected progress on inflation, investors are likely to question rate cut expectations that helped fuel the market’s rapid rise in November and December.

For more, be sure to read our Daily Markets column published each day by Nasdaq.

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