12 09 U.S. stocks open amid job market changes ahead of FOMC

12/09 U.S. stocks open amid job market changes ahead of FOMC

The U.S. stock market started steady despite concerns that it would restrict related access in China despite allowing H200 sales to Nvidia (-0.31 percent). In particular, the index only fluctuated as the employment data released ahead of the FOMC showed solidity and government bond rates rose. During the market, the index remained volatile, with JP Morgan (-4.66%) turning downward as financial stocks remained sluggish due to the mention of rising costs. However, ahead of the FOMC, the market fluctuated according to changes in individual stocks rather than the index, closing the mixed market (-0.38 percent, Nasdaq +0.10 percent, S&P 500 -0.11 percent, Russell 2000 +0.20 percent, Philadelphia Semiconductor Index -0.04 percent)

*Variants: The Job Market and the Fed

Last week, the ADP reported that private employment declined by 320,000 jobs in November, stoking job insecurity. However, the number of job openings rose to a five-month high of 7.7 million in October JOLTS, which was released today. However, hiring, which shows the vitality of the real job market, fell by 218,000 from the previous month, indicating that the slowdown in employment remains. As a result, the market interprets it as a basis that the U.S. economy is making a soft landing rather than a sharp downturn

Of course, the JOLTS details show that the total number of layoffs stood at 1.9 million, but it marked the largest increase in layoffs since 2023, with 130,000 layoffs in the accommodation and hospitality industries. In addition, voluntary retirements also fell by 27.6 million year-on-year, indicating that the job market’s leadership has been transferred to companies. Therefore, the Fed interpreted it as a normalization process for the job market, giving room for continued cautious rate cuts

Meanwhile, the polarization by industry is more pronounced. In the ADP report, the number of economically sensitive industries and white-collar jobs such as manufacturing (-1.8 million), construction (-0.9 million), and professional business services (-26,000) decreased significantly, and the number of job openings for professional business services in JOLTS plunged by 1140,000 from the previous month. In particular, the employment of small businesses in ADP decreased by 120,000 and the number of layoffs in the accommodation and food service industries in JOLTS increased rapidly, suggesting that the employment of small and medium-sized enterprises and service industries will decline due to the high-interest rate aftermath. This suggests that the job market may deteriorate qualitatively beyond simple cooling in the future

These data eventually led to divisions within the Fed and caused instability in interest rate policies depending on prices, employment, and what they centered on. We note Powell’s judgment, given that half of the current voting members have been skeptical of cutting interest rates. Although Powell will cut interest rates to calm internal divisions and defend the job market, he is expected to implement a strategy to raise the bar for further cuts. This pace adjustment will lead to interest rates, a rebound in the dollar, and limited fluctuations in the stock market

*Featured stocks: Tesla, Alphabet rise Vs. Nvidia, JPMorgan fall

Semiconductors: Nvidia H200 Falls Amid Controversy
Nvidia (-0.31%) announced that it would allow Trump to export H200 chips to China, but only if domestic chips are non-fungible in China, and news that the public sector is considering banning them, falling as Trump is burdened with receiving 25% of related sales. AMD (+0.23%) and Intel (+0.50%) also rose due to Trump’s announcement of permission to export chips but digested. Broadcom (+1.29%) rose in anticipation of the Pentagon’s announcement of Google’s Gemini for Governance, with UBS raising its target price to $472 recently. Micron (+2.23%) rose as Deutsche Bank raised its target price to $280 from 200, saying lack of supply of DRAM and HBM keeps the price going up, and HSBC started coverage with a buy opinion and a $330 target price. Philadelphia Semiconductor Index fell 0.04%.

AI, Data Center: More Defense and Cloud Cooperation
C3AI (+3.69%) rose on the news that it was selected by the U.S. Army’s Office of Rapid Capabilities and Critical Technologies (RCCTO) as a builder of AI-based forecasting systems for supporting battlefield munitions. Grid Dynamics (+3.30%) signed a multi-year agreement with Amazon Web Services (AWS) to accelerate Generative AI solutions for corporate customers. Pubmatic (+3.16%) was bullish on the news that it signed a deal with Kontext to insert ads in AI chatbots. Cloud-related companies are mixed, with Irene (+1.08%) and Coreweave (+5.13%) rising, but Nevius (-3.91%) falling

Cars: Tesla Rises on FSD Expectations
Tesla (+1.27 percent) rose after Piper Sandler gave a positive assessment of FSD, saying it has come as a technology that can operate without a driver. Furthermore, the assessment that Nvidia’s permission to export H200 has improved investor sentiment in that it eventually raises expectations for easing U.S.-China conflicts is also a factor. Ford (-0.46 percent) started higher by announcing a strategic partnership with Renault through its strategy toward Europe, but turned lower during the day. GM (+1.92 percent) is strong as Morgan Stanley upgraded its investment opinion to overweight.

Automotive parts, secondary batteries, lithium-related notes:
AutoZone (-7.17 percent), an auto parts maker, fell after sales at the same store met expectations, but its earnings per share were weaker than expected due to higher costs. Advanced Auto Parts (-9.34 percent) and O’Leary Automotive (-3.93 percent) also mostly fell. QuantumScape (+1.19 percent) rose after the company announced that it has completed installing key equipment for mass production of QSE-5 cells. As a result, lithium-related stocks such as Albemarle (+1.64%) and SQM (+4.07%) rose despite falling prices of lithium carbonate in China. Positive demand is due to the continued strength of the market and increased interest in the market

Big Tech Stocks: Alphabet Up Vs. Meta Platforms Down
Alphabet (+1.05%) rises as Pentagon says it will take control of digital battlefields through AI technology and strengthen analysis capabilities to boost combat capabilities by introducing Google Gemini Forger. Meta Platforms (-1.4