Premarket action Monday had the three major U.S. indexes trading lower. The Dow Jones industrials were down 0.66%, the S&P 500 down 0.92% and the Nasdaq is 1.24% lower.
Six of 11 market sectors closed higher on Friday, with consumer cyclicals (2.27%) and real estate (0.94%) leading the way. Energy (−1.99%) and health care (−0.69%) posted the largest losses. The Dow closed up 0.08%, the S&P 500 up 0.25% and the Nasdaq up 0.95%. Small-cap stocks put up Friday’s biggest gains, but the mega-caps were not all that far behind. The report on personal consumption expenditures showed that inflation continues to moderate but remains too high for the Federal Reserve’s liking.
Friday’s trading volume was roughly on par with the five-day average. New York Stock Exchange winners led losers by 1,798 to 1,278, while Nasdaq advancers led decliners by around 5 to 4.
Among S&P 500 stocks, electronic bond-trading platform Tesla Inc. (NASDAQ: TSLA) added another 11%, lifting the stock price by 33.3% for the week, while toy maker Hasbro Inc. (NYSE: HAS) dropped 8.1% after warning that it is firing 15% of its workforce (about 1,000 people), that the chief operating officer is leaving the company and that holiday-quarter revenue looks to be about 17% lower than year-ago levels.
The Bureau of Labor Statistics releases its quarterly employment cost index before markets open on Monday. The index is forecast to rise by 1.1%, less than the 1.2% increase in the third quarter. The index rose from 4% in the fourth quarter of 2021 to 5% in the third quarter of this year.
On Tuesday, the Fed’s Open Market Committee (FOMC) meeting begins and will culminate with a Wednesday afternoon announcement on interest rates. Economists are forecasting a high of one-quarter point, from a current range of 4.25% to 4.50% to 4.50% to 4.75%.
This week’s other major economic data point is the January nonfarm payroll report, due out before markets open on Friday. Payrolls are expected to shrink from 223,000 new jobs in December to 190,000, and the headline unemployment rate is expected to rise from 3.5% to 3.6%.
Shares of electric vehicle maker Lucid Group Inc. (NYSE: LCID) soared 43% on Friday on a rumor that Saudi Arabia’s public investment company would acquire the roughly 35% of the company that it does not already own. Lucid’s surge probably heated up interest in Tesla stock as well. Tesla’s U.S. price reductions are already paying off for the company as the company’s inventory is falling and there are plenty of analysts and investors who believe the stock is still cheap.
Lucid, however, and electric truck maker Rivian Automotive Inc. (NASDAQ: RIVN), are struggling to produce and deliver vehicles. Neither can afford a price war with Tesla, and all the back orders the companies claim can be canceled.
AMC Entertainment Holdings Inc. (NYSE: AMC, NYSE: APE) received its twelfth 12-month credit extension from lenders Citigroup, Goldman Sachs and Credit Suisse. The fact that AMC has not posted a profit since before the pandemic, or that its common stock value (AMC) has dropped by around 40%, or that its preferred shares (APE) have fallen by about 70% since their initial appearance last August, does not deter the true believers.
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