CNBC Daily Open: Despite losses, the rest of the year holds promise for markets

This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

Labor market remains tight
U.S. private sector jobs increased by 164,000 in December, according to payroll company ADP. That figure’s more than the estimated 130,000 and the downwardly revised 101,000 in November. In conjunction with the fall in initial jobless claims for the last week of 2023, that’s a sign the U.S. labor market is still tight — though the pace of pay increases slowed down, ADP said.

Nasdaq’s struggles
U.S. stocks lost ground Thursday, giving the Nasdaq Composite its longest losing streak since October 2022. Meanwhile, the 10-year U.S. Treasury yield climbed 9 basis points to hit 4.003%. Europe’s Stoxx 600 added 0.69% in its first rise this year. But shares of Britain’s JD Sports plunged 23% after the company said sales and margins toward the end of 2023 were below expectations.

Lazada layoffs
Lazada began laying off employees on Wednesday, a person with direct knowledge of the matter told CNBC. Employees “in the hundreds” from all levels are affected, according to the source, with most based in Singapore. The Alibaba-owned e-commerce company operates across Southeast Asian countries and is facing stiff competition from rivals such as Sea Limited’s Shopee and TikTok Shop.

New spin cycle
Peloton announced its partnership with TikTok, causing its shares to jump almost 14%. The deal will see the launch of a new fitness hub on TikTok known as “#TikTokFitness Powered by Peloton,” which will feature short-form fitness videos, longer live classes and content from TikTok creators and Peloton instructors.

[PRO] Overripe Apple?
Hot on the heels of Barclays’ downgrade of Apple, another Wall Street firm is casting doubt on the S&P 500’s biggest constituent. Piper Sandler downgraded the iPhone maker, raising concerns over peaking iPhone sales and sky-high valuation of Apple stock.

Stocks continued struggling for a third straight day in the new year. Mega-cap technology stocks, in particular, have been having a hard time. After another downbeat session yesterday, Apple’s lost around 5.5% so far this year, while Amazon’s down 4.85% and Microsoft in red by 2.15%%.

Yesterday’s tech losses caused the Nasdaq Composite to decline 0.56% Thursday, its fifth loss in a row and its longest losing streak since October 2022. The S&P 500 slipped 0.34%, declining for a fourth consecutive session. The Dow Jones Industrial Average, however, managed to eke out a marginal gain.

But investors shouldn’t take the first three trading days as tea leaves that augur how the rest of the year will turn out.

“Whether any of this lasts, I wouldn’t really look to the last few days as mattering very much,” Steven Wieting, chief investment strategist of Citi Global Wealth told CNBC. “It’s really a statistical coin toss.”

In fact, Wietling expects the S&P to climb more than 6% by the end of the year, which would put it around the 5,000 level.

Oppenheimer chief market strategist John Stoltzfus is even more optimistic. He thinks the S&P could rally more than 10% in 2024, driven higher by a better-than-expected earnings season.

“When you consider 11 hikes and four pauses insofar and no recession [along with] the resilience that’s seen in business and the consumer as well as in labor, all this looks remarkably good,” he said.

There’s evidence backing his forecast. Consumer strength’s demonstrated by data from Bank of America and Adobe. Bank of America credit and debit card data showed spending on holiday items rose 0.3% year on year in the five weeks from Thanksgiving to Dec. 30, while Adobe Analytics said online spending rose 4.9% to a record $222.1 billion between Nov. 1 and Dec. 31.

Meanwhile, economists expect today’s U.S. jobs report to show the labor market will continue cooling to just the right temperature.  

“The overall picture is one in which the labor market is gradually decelerating in a very orderly fashion,” said Julia Pollak, chief economist at online jobs marketplace ZipRecruiter.

With the consumer staying strong, the jobs market moderating without a sharp increase in unemployment and inflation — hopefully — continuing to subside, the outlook for stocks for the rest of the year appears better than what the first three days have suggested.