Early signs of cooling in the still-hot jobs market

Losing week
U.S. stocks inched up slightly Friday, but couldn’t reverse a weekly decline. Treasury yields ticked up for the second day, with the 10-year yield closing at 4.051%. Asia-Pacific markets started the week in the red. Hong Kong’s Hang Seng Index sank around 2%. Mainland China’s Shanghai Composite fell 0.9% as shadow banking conglomerate Zhongzhi Enterprises Group filed for bankruptcy liquidation Friday.

Joining the Asia-Pacific rally
Asia-Pacific markets rallied in 2023. Japan’s Nikkei 225 led the pack with its 28% jump. And the growth story looks set to continue. Analysts told CNBC that markets in India, Japan and Vietnam will be among the region’s top performers. That said, pessimism surrounding the Chinese market is unlikely to dissipate soon, but some sectors could be ripe for picking.

Grounded airplanes
The U.S. Federal Aviation Administration has ordered a temporary grounding of the Boeing 737 Max 9 aircraft, which means airlines won’t be able to use those particular Boeing models for flying. The directive comes after a piece of the aircraft blew out in the middle of an Alaska Airlines flight, leaving a gaping hole on the side of the plane.

[PRO] Memory chips to benefit
Demand for artificial intelligence applications will continue surging this year, Citi predicts, which in turn will uplift the prospects of chipmakers. In particular, the bank estimates specialized memory and storage products meant for AI chips will claim a greater share of the chip sector, boosting these nine memory chip stocks — with one having a potential 60% upside.

The headline number on the U.S. jobs report’s undeniably startling — 216,000 new jobs in December, compared with an expected 170,000. The unemployment rate defied forecasts for it to fall, while average hourly earnings were higher than estimates too.

The data suggests the U.S. labor market’s still running hot despite the 11 interest-rate hikes implemented by the Federal Reserve.

But the numbers aren’t so drastic that rate hikes could be back on the table. Look more closely and you’ll find pockets of weakness in the report.

The headline number, expectation-busting as it is, probably won’t persuade the Fed to resume hiking.

Consider also how October and November’s jobs numbers were downwardly revised, which point to a weaker-than-expected labor market last quarter. And when viewed on an annual basis, 2023 saw job growth of 2.7 million, dramatically lower than 2022’s addition of 4.8 million jobs.

The theme of growth continuing — but slowing — was also seen in December’s ISM services index, which measures business activity, such as price and inventory levels. The reading came in at 50.6%, indicating growth in the service sector, but that’s nearly two percentage points below expectations as well as November’s reading.

That’s probably why stocks managed to eke out small gains Friday, despite the shock of the headline jobs number.

The S&P 500 added 0.18%, the Dow Jones Industrial Average inched up 0.07% and the Nasdaq Composite ticked up 0.09%.

But those marginal increases couldn’t prevent major indexes from registering their first negative week in 10. For the week, the S&P fell 1.52%, the Dow lost 0.59% and the Nasdaq slumped 3.25%, its biggest decline since September.

Investors hoping for a positive catalyst for markets will be keeping their fingers crossed, hoping December’s consumer price index report comes in cooler than expected.

— CNBC’s Jeff Cox contributed to this report.