Stock Market Has Hope After Jobs Numbers; Tesla Sees More Pain

The major stock market indexes rose following December payroll numbers and wage growth data. The easing of hourly wage growth and a pullback from November payroll numbers should help the Fed’s decision to slow interest rate hikes. At least that’s what investors hope.

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The S&P 500 regained 1% after an early slide while the Nasdaq rose 0.7%. The Dow Jones Industrial Average rose 1.2% and the Russell 2000 climbed 1.3%. Volume on the NYSE was lower and Nasdaq trading was higher vs. the same time on Thursday.

The tech-heavy Nasdaq 100-tracking Invesco QQQ trust ETF (QQQ) added 0.6%.

Crude oil regained 1.6% to $74.82 per barrel. The Energy Select Sector SPDR ETF (XLE) added 2.6%. Natural gas changed course and rose 0.4%, still trading at $3 per million British thermal units.

European stock markets were positive, with the German DAX up 0.5% and the Paris CAC 40 gaining 0.8%. The London FTSE 100 added 0.7% in afternoon trading.

The Innovator IBD 50 ETF (FFTY) fared slightly better than the major stock market indexes, gaining 1.2%.

Oil field services company Halliburton (HAL) rose 3.7% and broke out of a cup-with-handle base hitting the 40.09 buy point on the MarketSmith chart.

Payroll Numbers Mixed

December nonfarm payrolls rose by 223,000, higher than the 200,000 estimate, but lower than the revised 256,000 additions in November, showing strength in the labor market. Private payrolls rose 220,000 versus the 175,000 consensus estimate, and more than November’s revised 202,000.

December’s drop from November shows a slight cooling down in the job market, and what investors are looking for from the Fed’s interest rate hikes.

Manufacturing payrolls added 8,000 versus the 10,000 expected, and equal to November’s revised number. The unemployment rate dropped to 3.5%, lower than the 3.7% forecast, vs. a revised 3.6% for November.

The month-over-month average hourly earnings rose 0.3%, lower than the 0.4% projected and unchanged from November’s revised number. The year-over-year rate increased by 4.6%, lower than the 5% forecast, showing that the Fed’s tactics are starting to take effect.

The labor participation rate was slightly higher than expected at 62.3% vs. 62.2%.

After the employment data came out, the 10-year Treasury note yield shed 10 basis points to 3.62%.

Odds for a 25-basis-point hike by the Federal Reserve at the February meeting stand at 76.2%. That would take the fed funds rate to the 4.5%-4.75% range. Meanwhile, 23.8% of traders are looking for a 50-basis-point hike, according to the CME Group FedWatch Tool.

Stock Market: Tesla Price Cut Pulls Down The Group

Tesla (TSLA) dropped another 3% after the EV maker cut prices of its Model 3 and Model Y cars by 6% to 13% on units for sale in China. Chinese demand has dropped for the vehicles, with Chinese December deliveries at 58,000 versus more than 100,000 in November.

Tesla says it was able to make the price reductions through engineering innovations and cost controls. The price reduction could help regain market share lost against its competitors.

Chinese EV stocks fell on the news. Nio (NIO) dropped over 11%, Li Auto (LI) plunged 10%, while Xpeng (XPEV) got hit the hardest, down over 14%.

World Wrestling Entertainment (WWE) spiked 18% on news that founder Vince McMahon looks to return to the company as executive chairman and sell the company.

Southwest Airlines (LUV) clawed back from morning losses and rose 0.5% on news it expects to post a Q4 loss of $725 million to $825 million, following its flight cancellation fiasco around the holiday season. The loss comes from lost revenue, reimbursements to passengers and higher pay for employees.

Southwest canceled over 16,700 flights between Dec. 21 and Dec. 31, affecting millions of travelers. The airline is due to report Q4 earnings on Jan. 26.

Semiconductor test system developer Aehr Test Systems (AEHR) soared over 39% after reporting better-than-expected EPS and sales after the market closed Thursday.

Gas and natural gas logistics company DCP Midstream (DCP) gained 6.4% on news that parent company Phillips 66 (PSX) said it would buy all the publicly held units, totaling around $3.8 billion. PSX was only mildly affected, down 0.2% on the news.

Home retailer Bed Bath & Beyond (BBBY) dropped over 15% on top of yesterday’s nearly 30% plunge on news it may plan to file for bankruptcy.

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