Nasdaq Leads Losses as Stocks React to December Jobs Data

The Nasdaq Composite took a hit this week, leading the broader market lower as investors digested the latest jobs data. The index lost 3.3% for the week, with technology and consumer discretionary sectors contributing most to the losses. The S&P 500 fell 1.5%, while the Dow declined 0.6%. The selloff snapped a nine-week rally for all three major indexes, which was fueled by optimism that the Federal Reserve is done raising interest rates and will begin easing policy this year.



The hotter-than-expected labor report showed that the US economy added 216,000 jobs in December, surpassing economists' expectations of 160,000 jobs. While the strong jobs data should have been a positive for the market, it raised concerns about the Fed's ability to cut interest rates, which is negative for growth-oriented tech stocks. The market had been pricing in a nearly one-in-three chance that the Fed won't cut interest rates in the first half of this year, up from the 11% likelihood seen a month ago.

The Fed had held its key interest rate at a two-decade high for the year leading up to September in an effort to quash inflation. Since then, the central bank's policy committee has cut the rate by an entire percentage point over the course of three meetings. Committee members have, however, cautioned that the pace of easing is likely to slow as inflation pressures persist.

The Dow rose 26 points, or 0.07%, while the S&P 500 gained 0.2%. The Nasdaq Composite added 0.09%. As stocks settle after the trading day, levels might change slightly.

Investors are now looking to the beginning of earnings season next week. Estimated year-over-year earnings growth for S&P 500 companies during the fourth fiscal quarter of 2023 is 1.3%, according to FactSet.



In conclusion, the Nasdaq's performance this week was influenced by a combination of factors, including the strong jobs data, concerns about the Fed's ability to cut interest rates, and the broader market's reaction to these developments. As investors await the start of earnings season, they will continue to monitor the economic data and the Fed's policy decisions for clues about the market's direction.