US stocks fall as nervous market awaits Friday’s inflation data and anticipates Fed’s response Market Snapshot

By Thornton McEnery and Mark DeCambre

U.S. stock indexes on Thursday all closed lower, as the Dow fell just into the red in the final minutes of trading, while investors waited for Friday’s November consumer price index report which could see annual inflation rise to 6.7%, its highest level in about 40 years.

While U.S. stocks have recovered to near record levels in the past week as the fear that the omicron variant of coronavirus might slow economic growth has faded, concern has risen over the potential for tighter monetary policy at next week’s Federal Reserve policy meeting.

How did stock benchmarks trade?

The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.19% gave up a fourth straight day of gains in the last five minutes of trading to close down 0.06 point or 0.0002% today to 35754.69.
The S&P 500 /zigman2/quotes/210599714/realtime SPX -0.30% was off 33.76 points or 0.72% today to 4667.45
The Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP -0.65% , meanwhile slid 269.62 points or 1.71% today to 15517.37, after briefly turning positive near Thursday’s open. It was the ninth straight day that the Nasdaq finished with a move of 100 points or more, the longest streak since Mar 20, 2020 accordng to Dow Jones data.

On Wednesday, the Dow rose 35 points, or 0.1%, to 35,755, the S&P 500 added 0.3%, or 14 points, to 4,701, and the Nasdaq Composite gained 100 points, or 0.6%, to 15,787. The preliminary data from Pfizer /zigman2/quotes/202877789/composite PFE -0.69% and BioNTech /zigman2/quotes/214419716/composite BNTX -0.24% showing their vaccine at three doses was effective against the omicron variant of coronavirus has further calmed market fears.

What drove the market?

Thursday’s uneven trading action came after three straight days of gains for equities that have brought the S&P 500 index within range of a record close, as investors shook off concerns about the omicron variant of the coronavirus and saw the downturn as a buying opportunity.

“For longer-term investors, negative news headlines and related market turmoil may present opportunities to add to risk exposures in some cyclical sectors (e.g., travel, leisure, hospitality) and to pare back on more growth-focused sectors such as technology,” wrote Nanette Abuhoff Jacobson, global investment strategist for Hartford Funds, in a recent blog .

Markets on Thursday were also digesting U.S. jobs data that showed new applications for unemployment benefits sank to a 52-year low of 184,000 for the week ended Dec. 4, the Labor Department said Thursday .

However, the big decline—new claims hit the lowest since September 1969—stemmed largely from holiday-related quirks in the data and is somewhat exaggerated.

“An impressive jobless claims report could not overcome rising risks to the short-term outlook that stem from virus jitters and fears of an aggressive Fed,” wrote OANDA’s Senior Market Analyst, Edward Moya, in a note on Thursday.

The slightly more downbeat close to the market on Thursday may be attributed to an earlier decision by Fitch Ratings to lower the credit rating of highly leveraged home builder China Evergrande /zigman2/quotes/208605330/delayed HK:3333 +8.55% , which reignited worries around the Chinese property sector. Fitch cited Evergrande’s nonpayment of coupons on two dollar-denominated bonds.

Markets appeared to be in something of a holding pattern in afternoon trading, as traders looked ahead to Friday’s November consumer inflation data.

“The next big move for equities will likely come after the US inflation report,” wrote Moya. “Which could tilt the scales on how fast the Fed tapers and when we can expect that first rate hike.”

The policy-setting Federal Open Market Committee will meet Dec. 14-15.

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