Stocks were notably lower for most of Wednesday's session as the 10-year Treasury yield spiked to levels not seen since last April, though the main benchmarks closed well off their intraday lows.
Specifically, the yield on the 10-year Treasury note hit 4.73% in overnight trading before settling the regular session slightly lower at 4.683%. The yield has climbed more than 100 basis points since its September low near 3.60%. (A basis point = 0.01%.)
As for the main indexes, the Nasdaq Composite slipped 0.06% to 19,478, while the S&P 500 added 0.2% to 5,918, and the Dow Jones Industrial Average rose 0.3% to 42,635.
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AMD stock gets double-downgraded to Sell
In single-stock news, Advanced Micro Devices (AMD) fell 4.3% after financial services firm HSBC double-downgraded the chipmaker to Reduce (the equivalent of Sell) from Buy.
HSBC analyst Frank Lee is concerned about AMD's ability to penetrate the AI GPU market and compete with Nvidia (NVDA).
AMD stock was once a highflier, more than doubling in value back in 2022. However, shares have shed 12% in the past year and Lee expects more downside ahead.
Indeed, the analyst slashed his price target on the semiconductor stock to $110 from $200, which is roughly 10% below current levels.
Exxon Mobil drops on earnings warning
Elsewhere, Exxon Mobil (XOM) stock declined 1.7% after the energy giant warned investors that lower oil prices and pressure on refining margins will weigh on its fourth-quarter earnings results.
In an 8-K filing, XOM said that it expects upstream earnings to decline by $500 million to $900 million from the third quarter due to declining liquid prices. Lower margins are expected to reduce its energy products earnings by $300 million to $700 million and its chemical products earnings by $300 million to $500 million.
Drugmaker Moderna (MRNA) was also a notable decliner, sinking 9.2%. This follows the healthcare stock's nearly 12% gain on Tuesday, which was sparked by news of the first death in the U.S. connected to the H1N5 bird flu. Moderna is developing a bird flu vaccine that is currently in Phase 3 studies.
Fed meeting minutes signal "uncertainty"
On the economic front, data from ADP showed the U.S. added 122,000 private payrolls in December – fewer than the 146,000 jobs added in November and the 136,000 jobs economists were expecting. The report also showed that annual pay was up 4.6% from the prior year, the slowest pace of growth since July 2021.
"The labor market downshifted to a more modest pace of growth in the final month of 2024, with a slowdown in both hiring and pay gains," said Nela Richardson, chief economist at ADP.
Investors were also cued into the mid-afternoon release of the minutes from the December Fed meeting, where the central bank cut interest rates by a quarter-percentage point but warned of fewer rate cuts in 2025.
According to the minutes, Fed officials "generally noted … that there were no signs of rapid deterioration in labor market conditions" and that "labor market conditions were unlikely to be a source of inflationary pressure in the near future."
However, the minutes also showed participants' difficulty in projections given "the elevated uncertainty regarding specifics about the scope and timing of potential changes to trade, immigration, fiscal, and regulatory policies and their potential effects on the economy."
"The minutes of the December Fed meeting were riddled with 'uncertainty,'" says Jeffrey Roach, chief economist for LPL Financial. "The word 'uncertain' or a derivation thereof was mentioned 12 times throughout the official record from the Federal Open Market Committee," as policymakers find it "increasingly difficult" to forecast "because of the uncertainty surrounding Trump policies still being developed."
Roach adds that the stock market could get choppy if there are any surprises in the December jobs report, due out Friday morning.
As a reminder, the stock market will be closed on Thursday, January 9, in observance of a national day of mourning and state funeral for former President Jimmy Carter. The bond market will close at 2 pm Eastern Standard Time.
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