The Dow Jones Industrial Average rose 10.15 points, or 0.03 percent, to 37,440.34. The S&P 500 sank 16.13 points, or 0.34 percent, to 4,688.68. The Nasdaq Composite Index shed 81.91 points, or 0.56 percent, to 14,510.3, chalking up its third straight loss in the new year.
Eight of the 11 primary S&P 500 sectors ended in red, with energy and consumer discretionary leading the laggards by losing 1.63 percent and 0.97 percent, respectively. Meanwhile, health and financials led the gainers by adding 0.46 percent and 0.24 percent, respectively.
The financial sector's surge was primarily driven by Allstate, which reached a new peak and saw a 3.4 percent increase following an upgrade to "overweight" by Morgan Stanley. Other insurance companies also experienced growth, with American International Group (AIG) and Hartford Financial Services Group (HIG) closing at their highest levels since 2008, mirroring the strong performance of Allstate earlier in the day.
Apple continued to face headwinds as Piper Sandler downgraded the stock to neutral, citing worries about rising handset inventories, a slowing Chinese market, and ongoing legal challenges. This added to the pressure on the tech giant, which has already seen its share price decline in recent weeks.
In the banking sector, JPMorgan Chase & Co. (JPM) and Truist Financial Corporation (TFC) enjoyed gains fueled by positive analyst reports from BofA Global Research. Banks should see benefits in 2024 from lower-yielding investments rolling off and being reinvested in new securities with higher yields, said Ian Lapey, portfolio manager of The Gabelli Global Financial Services Fund.
In terms of economic data, U.S. private companies defied expectations by adding 164,000 jobs in December, compared to 101,000 in November, according to the ADP National Employment report issued on Thursday. This marked the strongest month-on-month increase since August 2023. All eyes now turn to Friday's official employment report for further insights into the overall health of the U.S. labor market.
"Along with a softer-than-expected weekly jobless claims total, the upside surprise in ADP suggests the labor market is still on solid ground," said Chris Larkin, managing director of trading and investing at online brokerage platform E*TRADE.
"Today's numbers were a little muted. They weren't something that says we need to cut rates tomorrow," said Joe Saluzzi, co-manager of trading at Themis Trading. "So what you're seeing is people resetting expectations as to when those rate cuts will start."
Traders now see a 66.4 percent chance for at least a 25-basis point rate cut in March and a near 93 percent probability for May, according to the CME Group's FedWatch Tool.
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