Subdued start for Wall Street, with declines of around 1% for the Dow Jones, S&P500 and Nasdaq. Traders remain intent on evaluating the latest macroeconomic data and the potential implications on the Federal Reserve’s next moves.
Chairman Jerome Powell opened to a slowdown in the pace of rate hikes last week, fueling expectations of a 50 basis point hike at the December 13-14 FOMC meeting.
However, the job report released on Friday showed a higher than expected increase in payrolls (263,000) and an acceleration in wage pressures. Data that suggest a prolonged monetary tightening, with the maintenance of the cost of money at restrictive levels for longer than previous estimates.
The November final services PMI and composite indices were published during the day. The indicator on the US tertiary sector recorded a more marked contraction compared to the previous month, settling at 46.2 points from 47.8 in October. The composite index goes from 48.2 to 46.4 points. Both are slightly higher than preliminary estimates.
The Ism services index for November, on the other hand, shows an unexpected improvement in November, going from 54.4 to 56.5 points (consensus 53.5). Factory orders recorded an increase of 1% in October (compared to +0.7% expected), while durable goods in October increased by 1.1% (from +1% in the preliminary estimate).
On Forex, the dollar recovered ground against the other currencies, with the euro/dollar falling to 1.051 and the exchange rate between the greenback and the yen recovering to 136.1. On bonds, the US Treasury yield increased to 3.57% and the two-year yield to 4.33%.
As for US stocks, Tesla collapses (-5%), in the wake of rumors about a possible voluntary reduction in production in the Shanghai factory as early as this week. The move, which signals a slowdown in Chinese demand, would affect about 20% of production at full capacity.