Major averages finished mixed yesterday, close to the top of their trading ranges on lower volume. A number of Chinese stocks did well as there appears to be a close recent correlation between the US dollar/Chinese yuan and Chinese stocks that trade on the US exchanges. China has strengthened its yuan currency over the last two days which has resulted in a number of Chinese stocks that trade on US exchanges moving higher. With the yuan moving lower this morning, however, Chinese stocks are trading down.
December nonfarm payrolls came in at 156,000 vs. estimates of 175,000. The prior month's reading was revised to 204,000 from 178,000. Nonfarm private payrolls added 144,000 vs estimates of 170,000. The unemployment rate held at 4.7% matching consensus. Average hourly earnings increased 0.4% vs 0.3% est. This marked the largest increase since the Great Recession, reflecting a surge in employment over the past six years that’s left many companies complaining about a shortage of skilled labor.
This suggests the US Federal Reserve has more room to hike rates, underscoring their stance of three more rate hikes later this year.
Markets had a minor rally on the news.
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