Stock Market Today: Stocks mixed as surprise jobs report lifts Treasury yields, tests rate cut bets

With the Fed's next rate decision looming, and stocks looking to extend their solid end-of-year rally, a lot is riding on today's November jobs report.

Dec 8, 2023 - 19:30

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Stock Market Today: Stocks mixed as surprise jobs report lifts Treasury yields, tests rate cut bets

Check back for live updates throughout the trading day.

U.S. equity futures Friday traded mixed Friday, paired with an upside move in Treasury-bond yields, as investors focused on a surprisingly solid November jobs report that could test the market's current forecast for a soft landing in the world's biggest economy.

Updated at 8:49 AM EST

More jobs, more money ... more inflation?

The economy added nearly 200,000 new jobs last month, the Labor Department reported Friday, while average hourly earnings posted their biggest month-on-month increase since July of last year, as the resilient labor market continues to test Wall Street's rate-cut bets.

Treasury yields jumped higher in the wake of the data, with 10-year notes rising to 4.214%, but stocks are holding their nerve heading into the opening bell, with futures tied to the S&P 500 indicating a 4 point opening bell gain and those linked to the Dow suggesting a 22 point advance.

Higher bond yields have the tech-focused Nasdaq called 47 points lower.

Updated at 7:09 AM EST

Labor market resilience

Investors are betting on big Fed rate cuts next year, based on the idea that the U.S. economy is primed for a long-delayed recession. Friday's jobs report, however, could put those assumptions to the test as bond markets begin to growing increasingly nervous with the overwhelming 'Fed easing' consensus.

Stock Market Today:

Stocks yesterday got a big boost Thursday from a renewed surge in AI-related tech names, including Google (GOOGL) - Get Free Report and Advanced Micro Devices (AMD) - Get Free Report. This helped power the Nasdaq to a near 200-point advance, extending its fourth quarter gain to around 8.5%.

The broader S&P 500 ended Thursday trading only 0.8% higher, however, as the months-long Treasury bond rally stalled. Benchmark 10-year note yields moved up to 4.15%, and again to 4.182% in the overnight session, heading into today's jobs report.

The U.S. dollar index, meanwhile, was marked 0.21% higher in overnight trading at 103.758. The tick up was complicated by another surge in the yen linked to comments from Bank of Japan policymakers that suggest the era of negative rates in the world's third largest economy is coming to an end.

Friday's focus, however, will be on the Labor Department's November employment report at 8:30 am U.S. Eastern. It's expected to show the economy added 180,000 new jobs last month, with year-on-year wage growth moderating to around 4% and the headline unemployment rate holding at 3.9%.

The Federal Reserve's next policy meeting is looming next week, alongside a heavy slate of Treasury bond auctions and a key November inflation reading. So a lot is riding on today's jobs report to help clarify the resiliency of the labor market while testing the market's bets that the Fed will cut rates in the spring.

CME Group's FedWatch current pegs the changes of a quarter point rate cut in March at 51.9%, up from just 18.2% a month ago, with the odds of a move in May a 99.7% certainty.

That puts the current S&P 500 rally, which has lifted the benchmark more than 6% so far this quarter, on hold ahead of the report. S&P futures are indicating a modest 5 point opening bell dip amid exceptionally thin overnight volumes.

Futures linked to the Dow Jones Industrial Average, meanwhile, are priced for a 2 point decline while this tied to the Nasdaq are suggesting a 35 point move to the downside.

Global stocks were also in wait-and-see mode in the overnight session, with the MCSI World index on pace for its first weekly decline since October.

In Europe, the Stoxx 600 was up 0.5% in early Frankfurt trading, while Britain's FTSE 100 gained 0.37% in London.

Overnight in Asia, the yen's ongoing surge weighed on export and manufacturing stocks, pulling the Nikkei 1.76% lower into the close, while the broader MSCI ex-Japan benchmark rose 0.42%.