S&P 500, Nasdaq eke out records after jobs data surprises, Fed officials signal more cuts

It was another record-setting day on Wall Street with both the S&P 500 (^GSPC) and the tech-heavy Nasdaq Composite (^IXIC) claiming new records on Tuesday.

The two major indexes finished the session up about 0.1% and 0.4%, respectively. The Dow Jones Industrial Average (^DJI) recovered from session lows but still closed down nearly 0.2%.

The moves follow a surprise rebound in job openings as Fed officials signaled more rate cuts ahead.

South Korean President Yoon Suk Yeol’s decision to impose martial law — and then quickly reverse course — left global markets reeling on Tuesday.

The iShares MSCI South Korea ETF (EWY), which tracks over 90 large and mid-sized South Korean companies, dropped as much as 6% to hit a year-to-date low. Shares somewhat recovered following the president’s decision to withdraw the troops.

Safe-haven assets like gold (GC=F) and Treasury yields climbed in response, while bitcoin (BTC-USD), viewed as a risker asset, fell 1% to trade just below $95,500 a token.

The yield on the 10-year Treasury note, which was also impacted Tuesday by Fedspeak and rising job openings on Tuesday, climbed about 3 basis points to trade near 4.22%.

Last week, we highlighted how respondents in the Conference Board’s Consumer confidence survey were feeling better about the labor market.

Fresh data out Tuesday supported that narrative. The Job Openings and Labor Turnover Survey (JOLTS) for October showed the quits rate, a sign of confidence among workers, rose to 2.1% from 1.9% in September. This marked the first increase in the quits rate since May 2023.

This came as job openings also hit their highest levels since the summer, increasing to 7.74 million jobs open at the end of October, an increase from the 7.37 million seen in September.

“Today’s report is yet another indication that labor demand is softening but not collapsing,” Raymond James chief economist Eugenio Aleman wrote in a note following the release.

McDonald’s (MCD) stock was little changed on Tuesday after the US Centers for Disease Control (CDC) and Food and Drug Administration (FDA) closed their respective investigations into an E. Coli outbreak at the company’s stores.

The outbreak, tied to McDonald’s Quarter Pounder hamburgers, was first reported on Oct. 22 and sickened at least 104 people in 14 states. 34 were hospitalized and one death was recorded, according to the CDC.

The outbreak was linked to slivered onions distributed by California-based Taylor Farms.

“On October 22, 2024, Taylor Farms initiated a voluntary recall of yellow onions sent to McDonald’s and other food service customers,” the FDA said. “Food service customers who were impacted have been contacted directly. McDonald’s stopped using recalled onions from Taylor Farms at McDonald‘s stores in affected states.”

According to available information, it is unlikely that recalled yellow onions were sold to grocery stores or directly to consumers, the agency added.

Tesla (TSLA) stock fell as much as 2% Tuesday after CEO Elon Musk’s $56 billion pay deal was rejected for a second time by a Delaware judge.

Shares also fell on news that shipments of the EV maker’s China-built models once again declined.

Yahoo Finance’s Laura Bratton reports:

The Delaware Court of Chancery in January struck down Musk’s performance-based pay package, in the form of stock options, ending a multiyear lawsuit brought by a Tesla investor and heavy metal drummer who argued the scheme was excessive and that Tesla misled shareholders into approving it. On Monday, the court denied Musk’s motion to revise the earlier ruling.

Musk has previously indicated that he could walk away from the EV maker for compensation reasons. In a post on X in January, he said that if he does not secure 25% voting control in the company, he “would prefer to build products outside of Tesla.”

Musk once held a 22% stake in the EV maker, but that stake has fallen to 13% as he sold shares to fund his purchase of Twitter in 2022, which he renamed X.

Musk’s 2018 package was an effort by the Tesla board to retain him. At the time it was announced, Tesla shares rose 4%.

Read more here.

Investors digested more Fedspeak on Tuesday, with Federal Reserve governor Adriana Kugler saying the economy is in a solid place amid moderating inflation and a cooling labor market.

“I view the economy as being in a good position after making significant progress in recent years toward our dual-mandate goals of maximum employment and stable prices,” Kugler said in prepared remarks at an event in Detroit. “The labor market remains solid, and inflation appears to be on a sustainable path to our 2% goal, even if there have been some bumps along the way.”

Kugler said prices are still moderating despite sticky inflation like housing. “The job is not yet done,” she warned.

Overall, Kugler said recent rate cuts have served as “steps toward removing restraint, as we are in the process of moving policy toward a more neutral setting.”

San Francisco Fed president Mary Daly told Fox Business on Tuesday that policy will remain restrictive, even if the central bank decides to cut rates in December.

“In order to keep the economy in a good place we have to continue to recalibrate policy,” Daly said. “Whether it’ll be in December or some time later, that’s a question we’ll have a chance to debate and discuss in our next meeting, but the point is we have to keep policy moving down to accommodate the economy.”

As of Tuesday afternoon, markets were pricing in a roughly 70% chance the Fed cuts interest rates by a quarter of a percentage point at its final meeting of the year on Dec. 18, per the CME FedWatch Tool.

Daly also addressed the potential impact of tariffs from the incoming Trump administration. The president-elect has pledged to impose blanket tariffs of at least 10% on all trading partners, including a 60% tariff on Chinese imports.

Should countries retaliate with their own duties, a resulting “tit-for-tat” trade war could keep inflation elevated over the long term.

But Daly said the US economy, which is currently in a “really good place,” has adjusted to tariffs in the past and would do so again.

Communication Services (XLC), Health Care (XLV), and Energy (XLE) led Tuesday’s sector action. Markets traded mixed as traders assessed new jobs data and awaited more Fedspeak.

Oil prices stood out, with WTI crude (CL=F) climbing 3% to trade above $70 a barrel. Brent crude (BZ=F), the international benchmark, also rose to trade just below $74 a barrel.

Industrials (XLI) was the day’s biggest laggard, dragged down by shares of Aflac (AFL), which fell 4% as investors weighed a disappointing outlook. Financials (XLF) and Consumer Staples (XLP) also fell.

The US economy is on solid footing right now. Economists at Bank of America expect it to stay that way through next year.

In a research note released to reporters on Monday, BofA’s economics team led by Claudio Irigoyen projected the US economy will grow at an annualized rate of 2.4% in 2025, higher than current forecasts for 2% growth, according to the latest Bloomberg consensus estimates.

This comes despite uncertainties surrounding the economic policies of President-elect Donald Trump, including campaign promises of tariffs on imported goods, tax cuts for corporations, and curbs on immigration, which economists have viewed as inflationary.

Higher rates, coupled with a hawkish tariff policy, would strengthen the US dollar and create spillover effects to global financial conditions, representing “a major shock, not only for the US economy but the rest of the world,” according to BofA.

But there’s one important caveat: The US is best prepared to weather any economic storm that follows Trump’s agenda.

“We like to say that the US imports a lot of stuff, but it doesn’t import recessions,” Aditya Bhave, senior US economist at Bank of America, told Yahoo Finance in a separate press briefing on Monday. “It only exports recessions.”

Read more here.

Job openings rose more than expected in October as investors continue to dissect the pace of the labor market slowdown seen in the back half of 2024 amid questions over how much further the Federal Reserve will slash interest rates over the next year.

New data from the Bureau of Labor Statistics released Wednesday showed 7.74 million jobs were open at the end of October, an increase from 7.37 million in September.

The September figure was revised lower from the 7.44 million open jobs initially reported. Economists surveyed by Bloomberg expected Tuesday’s report to show 7.51 million openings in October.

The Job Openings and Labor Turnover Survey (JOLTS) also showed 5.31 million hires were made during the month, down from 5.58 million hires made during September. The hiring rate fell to 3.3% from 3.5% in September. Also in Tuesday’s report: The quits rate, a sign of confidence among workers, rose to 2.1% from 1.9% in September.

Read more here.

US stocks opened mostly higher on Tuesday, hovering near all-time highs.

The S&P 500 (^GSPC) and the tech-heavy Nasdaq Composite (^IXIC) each opened close to the flat line, coming off fresh records for the two gauges. The Dow Jones Industrial Average (^DJI) ticked up about 0.1%.

Investors are bracing for a reading later on JOLTS job openings in October, the first in a wave of key data this week that culminates in Friday’s all-important monthly US payrolls report.

Lots of analysis on the CEO shake-up at Intel (INTC) has been released, but this is not a one-day story.

The path forward for Intel is vitally important for the country — the chip supply chain must be diversified beyond a singular reliance on Taiwan Semiconductor (TSM).

But that path forward for Intel will be brutal, at best.

Here are a couple of good points this morning from Evercore ISI analyst Mark Lipacis:

Below are some of my initial insights on Intel CEO Pat Gelsinger’s departure: