News

By David French and Johann M Cherian

Jan 5 (Reuters) - U.S. stock indexes were fighting to hold onto gains into the afternoon on a topsy-turvy Friday, following data releases which offered contrasting views on when interest rate cuts may begin.

The data from the Institute for Supply Management (ISM) came hours after robust jobs data doused expectations of rapid easing, which had pushed futures lower prior to the open.

Investors have been cautious in the opening sessions of 2024, as they awaited further clarity on when interest rate cuts will begin, and how quickly they will happen.

Markets had initially scaled back bets for a March rate cut after a Labor Department report showed U.S. employers hired more workers than expected in December, while raising wages at a solid clip.

Traders now see a 71% chance of at least a 25-basis point cut in March, up from nearly 55% earlier in the day, according to the CME Group's FedWatch tool.

"The name of the game with the numbers today is that employment, it's weaker than advertised when you take into account the revisions," said Thomas Hayes, chairman at Great Hill Capital.

"And on ISM non-manufacturing data, it came in lower than estimated as well and that keeps the Fed cuts sooner rather than later on the table and that's what the market likes."

The yield on the benchmark U.S. Treasury 10-year note US10YT=RR, reflecting interest rate expectations, ticked up into the afternoon and was back above 4%. US/

The S&P 500 is on track for its worst weekly performance since late October, while the Nasdaq is on course for its worst week since late September, impacted by rotation out of tech-heavy stocks into defensive sectors like healthcare, financials and utilities.

At 1:47 p.m. ET, the Dow Jones Industrial Average .DJI was up 49.56 points, or 0.13%, at 37,489.9, the S&P 500 .SPX was up 13.87 points, or 0.3%, at 4,702.55, and the Nasdaq Composite .IXIC was up 50.79 points, or 0.35%, at 14,561.09.

The financials index .SPSY was among the S&P 500 sectors in positive territory. It was trading 0.5% higher, having notching an over 1-1/2-year high earlier in the day.

Banks continued to perform well, ahead of the start of earnings season next week, with the S&P Banks index .SPXBK up 1.4% at an 11-month high. Large regional banks were buoyant, with KeyCorp KEY.N, Citizens Financial Group .N> and Comerica Inc CMA.Nall rising more than 2.8%.

Applied Therapeutics APLT.O tumbled 37.6% after the drug developer's heart disease drug showed disappointing results in a late-stage trial.

Palantir TechnologiesPLTR.N lost 1.2% after Jefferies downgraded the data analytics firm to "underperform" on high stock valuations.

PelotonPTON.O jumped 8.4% after the fitness equipment maker said it will bring its workout content to short-form video platform TikTok in an exclusive partnership.

Payroll growth ebbs back toward pre-Covid trend Payroll growth ebbs back toward pre-Covid trend https://tmsnrt.rs/3deZoGA

S&P 500, Nasdaq on track to snap nine-week winning streak https://tmsnrt.rs/3vvGbsI

(Reporting by Johann M Cherian and Shristi Achar A in Bengaluru and David French in New York; Editing by Devika Syamnath and Aurora Ellis)

((johann.mcherian@thomsonreuters.com;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.