MARKET SNAPSHOT
U.S. stocks slid and Treasury yields rallied as the U.S. labor market remained hot, fueling bets on a prolonged period of unchanged interest rates at high levels. Oil futures reached multi-month highs as the Biden administration tightened sanctions on Russian oil while winter weather lifted demand for heating fuels and threatened production freeze-offs. Gold and the dollar were boosted higher by inflation fears.
MARKET WRAPS
EQUITIES
The S&P 500 wiped out its 2025 gains as investors assessed a blockbuster jobs report that makes future interest-rate cuts seem less likely.
New nonfarm payrolls data shows the economy added 256,000 jobs in December, blowing past consensus expectations of 155,000. The unemployment rate edged lower to 4.1%, when it had been expected to hold steady at 4.2%.
"The good news is starting to once again sound like bad news. Longer end rates are climbing higher, odds of a 2025 Fed cut are rapidly declining and further dollar strength has potential to be a headwind for U.S. companies," said Lara Castleton, U.S. head of portfolio construction and strategy at Janus Henderson Investors.
The Dow Jones Industrial Average dropped 1.6%. The S&P 500 fell 1.5% and the Nasdaq Composite gave up 1.6%.
Earlier Friday, Chinese shares declined, with all sectors closing in the red, led by losses in consumer-related stocks. Investor sentiment remained weak after China's consumer prices posted a modest 0.2% growth in 2024, reflecting ongoing deflationary pressures.
The benchmark Shanghai Composite Index ended 1.3% lower, the Shenzhen Composite Index fell 2.2% and the ChiNext Price Index gave back 1.8%. Hong Kong's Hang Seng Index lost 0.9%.
Japan's Nikkei Stock Average fell 1.0%, as auto and pharmaceutical stocks led declines amid growing concerns of higher borrowing costs.
Stocks in Australia slipped, as the S&P/ASX 200 fell 0.4%, the second consecutive day of decreases.
New Zealand's S&P/NZX 50 shed 0.4%. The benchmark index is down 1.6% early in the new year, running on thin volumes and little stock-specific news during the Southern Hemisphere's summer holiday season.
COMMODITIES
Oil futures ended sharply higher to their highest finish since early October, as fresh U.S. sanctions on Russia's oil sector looked to threaten global supplies and as winter storms in the U.S. were expected to boost demand for heating fuels.
West Texas Intermediate crude for February delivery rose 3.6% to settle at $76.57 a barrel on the New York Mercantile Exchange. March Brent crude climbed 3.7% at $79.76 a barrel on ICE Futures Europe.
"This definitely is upping the game when it comes to enforcement of Russian sanctions," said Phil Flynn, senior market analyst at the Price Futures Group - pointing out that the world had in some ways "turned a blind eye" to Russia's efforts to sidestep sanctions on its oil sector because the world needed its oil.
Front month Comex gold for January delivery gained 0.9% to settle at $2708.50 per troy ounce.
"Worries about inflation expectations are definitely supporting gold," said Imaru Casanova, portfolio manager of the VanEck International Investors Gold fund.
TODAY'S TOP HEADLINES
Hiring Blew Past Expectations With 256,000 Jobs Added in December
The U.S. labor market has found its footing, a relief to households and businesses but a growing cause for concern in financial markets.
The U.S. economy added 256,000 jobs in December and the unemployment rate edged down to 4.1%, the Labor Department said Friday. Last month's gain in nonfarm payrolls was the biggest since March and well above the 155,000 jobs that economists had expected, according to a Wall Street Journal survey. The unemployment rate was also better than the expected 4.2%.
Friday's jobs report was the latest sign that the U.S. labor market has recovered from its midyear stumble and might even be gaining steam. As such, it shuts the door on an interest-rate cut at the Federal Reserve's next meeting, which is Jan. 28-29. It also reduces the chances of a cut at the Fed's subsequent meeting in March.
U.S. Consumer Confidence Dips as Inflation Expectations Spike
U.S. consumer confidence clouded over a little this month, after views of the economy weakened on expectations of higher inflation, as President-elect Donald Trump prepares to take office proposing tax cuts and new import tariffs.
The University of Michigan's index of consumer sentiment dipped to 73.2 at the start of January from 74.0 last month, a little weaker than expectations from economists polled by The Wall Street Journal that the level would remain the same.
While consumers' views of their personal finances improved about 5%, their economic outlook fell back 7% for the short run and 5% for the long run, according to the survey's director Joanne Hsu.
Biden Administration Fires Parting-Shot Sanctions at Russia's Energy Sector
WASHINGTON-The Biden administration tightened sanctions against the Russian energy sector Friday, a parting shot in Washington's pressure campaign to prod the Kremlin toward ending its war in Ukraine.
The sanctions target two major oil producers, liquefied natural gas production and elements of Russia's so-called dark fleet of tankers used to carry oil to non-Western buyers. But the U.S. stopped short of blacklisting Russia's largest energy company, Rosneft Oil, and didn't touch the biggest of the oil traders that Moscow has used as conduits for crude exports.
The steps will cost Russia billions of dollars a month in revenues of its most important exports, a senior administration official said. The measures "should be seen as a punctuation on our broader effort to boost Ukraine's staying power and strengthen its hand to negotiate a just and lasting end of this war," the official said.
Hershey CEO Michele Buck to Retire Next Year
Hershey is seeking its next leader after the chocolate giant's fortunes have soured.
Michele Buck, a 20-year veteran of Hershey who assumed leadership in 2017, said she would step down from her roles as president and chief executive on June 30, 2026. Hershey's board has appointed a committee to direct a search for the company's next leader.
Hershey said it would consider both external and internal CEO candidates, working with an external search firm. Buck said she has been in discussions with the company's board about her retirement timing for years, and informed them of her desire to leave.
Constellation Energy Agrees to Buy Calpine for $16.4 Billion
Constellation Energy agreed to buy Calpine for $16.4 billion, combining two of the country's largest electricity generators at a time when their product is in high demand from tech companies.
Including the assumption of debt, Constellation on Friday valued the cash-and-stock deal for the privately held Calpine at $26.6 billion.
The value of power generators has soared in the past year due in large part to artificial intelligence. Tech companies are adding new data centers amid a boom in demand for AI computing, and those facilities require massive amounts of electricity.
Expected Major Events for Monday
00:00/AUS: Dec Melbourne Institute Monthly Inflation Gauge
00:30/AUS: Dec ANZ-Indeed Job Ads
09:59/CHN: Dec Broad Money M2
09:59/CHN: Dec Trade
09:59/CHN: Dec Commodities Trade Data
09:59/CHN: Dec Energy Trade Data
21:00/NZ: 4Q NZIER Quarterly Survey of Business Opinion
23:50/JPN: Dec Bank Lending
23:50/JPN: Dec International Transactions in Securities
23:50/JPN: 3Q Revised Balance of Payments
23:50/JPN: Nov Balance of Payments
00:00/AUS: Jan Westpac - Melbourne Institute Consumer Sentiment Survey
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This article is a text version of a Wall Street Journal newsletter published earlier today.
(END) Dow Jones Newswires
January 12, 2025 16:30 ET (21:30 GMT)
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