December jobs data is startlingly strong

Hot jobs market
The U.S. labor market added 216,000 jobs in December. That’s much more than the 170,000 expected by economists surveyed by Dow Jones, and the downwardly revised 173,000 jobs added in November. The unemployment rate held steady at 3.7%, defying estimates of a 10-basis-point rise. Meanwhile, average hourly earnings rose 4.1% from a year earlier, higher than the 3.9% forecast.

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%. The pan-European Stoxx 600 index retreated 0.27%. Retail stocks fell 1.1%, leading sector losses, after data showed German retail sales fell 2.5% for the month, much more than estimates of a 0.1% slide.

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.

Potential Apple lawsuit
Apple just can’t catch a break. Fresh off a downgrade to its shares by Barclays and Piper Sandler, the technology giant is potentially facing an antitrust lawsuit by the U.S. Department of Justice, according to a report from The New York Times. The lawsuit could target how the Apple Watch works exclusively with the iPhone, as well as the company’s iMessage service, which excludes non-Apple devices.

[PRO] Numbers to watch
The U.S. consumer price index report comes out Thursday this week, and will be the major catalyst for markets as investors assess if the U.S. Federal Reserve is edging closer to its goal of keeping inflation at 2%. But don’t neglect Friday, which is jam-packed with earnings reports from big banks such as JPMorgan Chase, Citigroup and Bank of America.

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.

“While the Dow Jones estimate is for a nonfarm payrolls gain of 170,000, Art Hogan, chief market strategist at B. Riley Financial, said the acceptable range is really something like 100,000-250,000,” CNBC’s Jeff Cox noted.

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.