Mixed Payroll Signals Leave U.S. Equities Divergent

Market Overview

U.S. equities closed mixed after Novembers nonfarm payrolls report delivered conflicting signals. Job gains exceeded expectations, but the unemployment rate unexpectedly rose to a four-year high. The data complexity led traders to refrain from increasing bets on imminent Federal Reserve rate cuts.

Equity performance diverged across sectors. The Dow Jones Industrial Average and the S&P 500 extended their losing streaks to a third consecutive session, while technology stocks rebounded after several days of declines, helping the Nasdaq Composite finish higher.

At the stock level, Tesla surged more than 3%, marking a fresh all-time high. Nvidia rebounded 0.8%, while Circle jumped nearly 10%. In contrast, Alphabet fell for a fourth straight session. Pfizer issued a downbeat earnings outlook, sending its shares down 3.4% and weighing on the healthcare sector. Energy stocks slid sharply, down around 3%, pressured by falling oil prices.

From a macro perspective, U.S. Treasury yields declined broadly, with the 10-year yield falling more than 3 basis points. The U.S. dollar index was little changed, while the offshore Chinese yuan extended its strength, briefly reaching around 7.03, a 14-month high. Bitcoin rebounded 1.8%.

In commodities, gold held the USD 4,300 level after wide intraday swings, while silver edged slightly lower. WTI crude briefly fell below USD 55 per barrel, marking its lowest level since early 2021.

Key Themes to Watch

U.S. October Retail Sales Flat Overall

U.S. retail sales in October were weighed down by declining auto sales and lower gasoline prices, resulting in flat month-over-month growth and a slight miss versus market expectations. However, core retail sales, excluding autos, gasoline, and other volatile components, significantly outperformed expectations, signaling accelerating consumer spending at the start of the holiday shopping season.

The retail sales control group used in GDP calculations rose 0.8% month over month, marking the strongest increase since June.

U.S. December Markit Composite PMI Hits Six-Month Low

According to data released Tuesday by S&P Global, the flash December Composite Output Index fell 1.2 points to 53, its lowest level in six months. The Composite Input Prices Index surged nearly 3 points to 64.1, indicating renewed cost pressures. Meanwhile, the Composite Employment Index declined 1.4 points, moving closer to stagnation.

Both the manufacturing and services PMI readings came in below market expectations.

Events in Focus (GMT+8)

22:05 (US)

FOMC permanent voter and New York Fed President John Williams delivers opening remarks at the Federal Reserve Bank of New Yorks 2025 FX Market Structure Conference.

23:30 (US)

EIA Weekly U.S. Crude Oil Inventories for the week ending December 12 (in thousand barrels).