A real bifurcation in stock trading dominated the market Tuesday, with high-growth tech stocks seen selling off in favor of equities in industries market participants have tended to look past, like Energy (+3.5% on the day), Financials (+2.6%) and Industrials (+2%). A 10-year Treasury yield cresting upward past 1.68% midday — close to highs in this cycle — is seen as a catalyst for this action; all major indexes were trading in the green as of this morning’s opening bell.
The Dow managed to close at a fresh all-time high today, +214 points or +0.59% to close a hair shy of 36.8K, off its highs for the day. The blue-chip index was hit by weakness at
Cisco
CSCO
and
salesforce
CRM
, but
JPMorgan
JPM
and
Goldman Sachs
GS
both gained +3% on the day, while
Caterpillar
CAT
surged ahead +5%.
The S&P 500 petered out into the closing minute of trading, finishing -0.06% in the regular session, despite an 1.7% surge at
Ford
F
on news that the automaker was planning to nearly double output of its F-150 Lightning electric vehicle pickup truck. The company now plans to produce 150K such vehicles by next year; currently, reservations for the F-150 Lightning are at 200K. Ford shares grew +170% in 2021 — a remarkable achievement for a non-tech stock.
The Nasdaq experienced a much bigger pullback, -1.33% or -210 points. With more negative headlines out of China — both related to new Covid outbreaks and actions being taken by the central government — are taking a big bite out of Chinese stocks on the S&P, including
JD.com
JD
-6% and
Pinduoduo
PDD
-11.2%. Other high flyers of late, including
Tesla
TSLA
-4.2% and
NVIDIA
NVDA
-2.7% look like more pure rotation plays out of forward speculation and into cyclicals.
Earlier today, we saw
ISM Manufacturing
numbers come down unexpectedly, to 58.7% last month from the 61.1% rate in November. This is the lowest level we’ve seen since the identical 58.7% reported in January of 2021. The past 12 months peaked in March of last year at 64.7%, and any read above 50% represents expanding manufacturing growth.
A new
JOLTS report
for November was also released this morning, with an eye-opening number of Americans having quit their jobs that month: 4.5 million, versus expectations of 4.2 million. This comes to about 1 in 30 people having quit their jobs during this time.) The majority of these quits came from the Leisure & Hospitality space, particularly Accommodation & Food Services. By far the biggest region for job quits was the South, more than doubling any other single region for the month.
The JOLTS headline data showed a tick-down in job openings to 10.56 million, down from the 11.0 million reported in October of last year but still the third-highest on record (October being the all-time highest read). So while demand for workforce continues at a high rate — or did, two months ago — Americans are leaving their positions at an accelerated rate, as well.
Tomorrow morning’s private-sector payroll report from
Automatic Data Processing
ADP
will help fill in plenty of the jobs picture, albeit for December. For November, ADP recorded 534K new positions filled, and an additional 375K are expected for last month. This is historically robust jobs growth; we’ll see how many more non-government, non-farm jobs were filled to keep this drive towards full employment alive.
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