Dow closes 300 points lower after strong jobs data signals more rate hikes

Pro Picks: Watch all of Thursday's big stock calls on CNBC
Pro Picks: Watch all of Thursday's big stock calls on CNBC

Stocks fell Thursday after jobs data showed the labor market is still strong despite the Federal Reserve's interest rate hikes to tame inflation.

The Dow Jones Industrial Average fell 339.69 points, or 1.02%, to 32,930.08. It was weighed down by Walgreens, which lost 6.13% after earnings showed a $5.2 billion opioid litigation settlement drove a quarterly loss.

The S&P 500 shed 1.16% to close at 3,808.10 and the Nasdaq Composite slipped 1.47% to 10,305.24. Bed, Bath & Beyond shed 29.88% after saying its short on cash and considering bankruptcy, and crypto-friendly bank Silvergate Capital plummeted 42.73% after it disclosed major customer withdrawals. All three averages are on track to notch five weeks of losses

Stocks rose from lows of the day in the afternoon but remained down when St. Louis Federal Reserve President James Bullard said that 2023 may be a disinflationary year in a speech. He also noted that while current policy isn't "sufficiently restrictive," it's moving in that direction and should reach it this year.

Stocks opened lower after the ADP private payrolls report showed that employers added 235,000 jobs in December, well above economist estimates. Wages also increased more than anticipated, another sign that the labor market remains hot. Later in the morning, weekly jobless claims came in below expectations and showed a drop in continuing claims.

"While we will get a better overall picture of the jobs market tomorrow, private payrolls beating expectations and jobless claims coming in below are indications that the labor market remains resilient," said Mike Loewengart of Morgan Stanley Global Investment Office.

"These come on the heels of big-name companies announcing sizable job cuts so there is no doubt the market's pressures are weighing on companies, but it remains to be seen when hiring will slow demonstrably," he added.

On Friday, investors will review the December jobs report for updated data on employment and hourly wages. Economists estimate that U.S. employers added some 200,000 jobs in December, which would represent a moderate slowdown from gains in the previous month.

A higher number would be further bad news to the Fed that the labor market is still strong. In addition, investors don't want to see big gains in wage growth, which could signal higher inflation.

Correction: A previous version misspelled Loewengart's last name.

Stocks close lower Thursday, erasing Wednesday gains

Stocks fell Thursday and erased Wednesday's gains after job data was better than expected.

The Dow Jones Industrial Average fell 340 points, or 0.89%, to 32,929.72. It was weighed down by Walgreens, which lost 6.13% after earnings showed a $5.2 billion opioid litigation settlement drove a quarterly loss.

The S&P 500 shed 1.17% to close at 3,807.99 and the Nasdaq Composite slipped 1.47% to 10,305.24. Bed, Bath & Beyond shed 29.88% after saying its short on cash and considering bankruptcy, and crypto-friendly bank Silvergate Capital plummeted 42.73% after it disclosed major customer withdrawals.

-- Carmen Reinicke

Bullish sentiment in weekly retail investor survey among 60 lowest in history

Weekly bullish stock market sentiment fell to 20.5% in the latest survey by the American Association of Individual Investors, down from 26.5% last week and among the 60 lowest readings in the history of the survey, which began in 1987.

Neutral sentiment climbed to 37.5% — the highest since March 2022 — from 25.9% in the survey ended Dec. 28, while bearish sentiment fell to 42% (still way above the historical average of 31%) from 47.6%.

Earlier this week, the weekly Investors Intelligence survey of financial newsletter writers showed bullish sentiment at 36.6%, down from 37.5% the week before and a December high of 43.3%. Bearish view edged up to 33.8% from 33.3%, but remains far below the recent peak of 44.1% seen in early October.

Similarly, the II percentage of writers expecting a correction rose to 29.6% from 29.2%.

— Scott Schnipper

Apple still has potential, Kevin Simpson says

Despite hitting new 52-week lows recently, Capital Wealth Management founder Kevin Simpson still thinks Apple is a smart play.

Simpson said on CNBC's "Halftime Report" that the stock price could go down if the multiple does not expand. But he said this current downswing could be the right time to start "building a position" while awaiting a better economic environment.

Investors should "start looking at it," he said. However, "you have to definitely anticipate that Apple, as well as the broader markets, can certainly be lower before we get an all clear signal and we're celebrating the next bull market."

Apple had the biggest market cap loss among stocks in 2022 after facing questions about the popularity of its new iPhones and facing difficulties with production during the holiday season. The stock's market cap fell below $2 trillion for the first time since May earlier this week.

The stock lost 26.8% in 2022.

— Alex Harring

Stocks down but off lows of the day in final hour of trading

Stocks were down heading into the final hour of trading Thursday but off the lows of the day as investors digested better-than-expected jobs data and looked ahead to Friday's nonfarm payrolls report.

The Dow Jones Industrial Average fell 261 points, or 0.79%. The S&P 500 and Nasdaq Composite slipped 0.86% and 1.04%, respectively.

All three major averages gave up Wednesday's gains and were on track for a negative return in the first week of the new year.

—Carmen Reinicke

Edward Jones upgrades Tesla

Tesla's continued decline has lured a new Wall Street analyst off the sidelines.

Edward Jones analyst Jeff Windau upgraded Tesla to buy from hold on Thursday, saying that the stock's recently slashed price "does not reflect its long-term growth opportunities."

Still, shares of Tesla are down more 2% on the day.

Read more about the upgrade on CNBC Pro.

— Jesse Pound

NYU's Aswath Damodaran feels 'pretty comfortable' holding mega-cap tech stocks — except Netflix

Aswath Damodaran, finance professor at NYU's Stern School of Business, says most mega-cap tech stocks are starting to look like bargains after their declines last year — except Netflix.

"I think at this point when you look at the pricing you can get them in, I feel pretty comfortable holding them," Damodaran said Thursday on CNBC's "The Exchange."

"In fact, I hold five of the six FAANGM stocks other than Netflix, because I think at the prices they're trading at now, they're much better bargains than they were at a year ago. A year ago, I thought they were pushing for the skies," he added.

Rising interest rates hurt mega-cap tech stocks last year, with shares of Amazon tumbling nearly 50% in 2022. Meanwhile, Google-parent Alphabet and Apple declined 39% and 26%. Facebook-parent Meta dropped 64%. Shares of Netflix ended the year 51% lower.

The finance professor said Netflix is off his list because of problems in the broader entertainment industry that is hurting competitors such as Disney.

"The businesses is broken and needs to be fixed, and I'm not sure where the fix is going to come from. So, until I get a better sense of how the business is going to play out, I think Netflix is off my list," he said.

— Sarah Min

Economists estimate employers added 200,000 jobs in December

On Friday, the December nonfarm payrolls report will show how many jobs employers added in the last month of 2022. Following a stronger than anticipated ADP Private Payrolls report on Wednesday as well as better than expected job openings and jobless claims numbers, investors are now worrying the print will surprise to the upside.

The consensus economist estimate is that U.S. employers added 200,000 jobs in the month, a decrease from the 263,000 added in November. Moderate growth would be good news for the Federal Reserve, which is looking to slow the economy to tame high inflation.

A strong report, however, would mean that the central bank likely has to tighten policy more and keep rates higher for longer. This could weigh on stocks Friday.

—Carmen Reinicke

See which stocks made Deutsche Bank top picks list for the first quarter

Deutsche Bank released its top stock ideas for the first quarter Wednesday.

The firm's "Fresh Money" list has returned 109% since its inception in the third quarter of 2017, meaning it has outperformed the S&P 500's 76% gain in the same period.

Similarly, the rolling 12-month performance from the last four quarterly reports shows a loss of 11.4%, a smaller drop than the S&P 500's 16.7%.

CNBC Pro subscribers can see some of the stocks that made the list here.

— Alex Harring

St. Louis Fed President James Bullard says 2023 is poised to be a disinflationary year

There are a number of factors that could make 2023 a disinflationary year, according to St. Louis Federal Reserve Bank President James Bullard in a Thursday speech.

He noted that GDP growth likely improved in the second half of 2022 and inflation has declined recently, even though it remains too high overall.

He added that while current policy is not yet "sufficiently restrictive" but is moving closer and will reach that level this year. This signaled to markets that he may be backing off the more than 5% terminal rate he sees the central bank reaching before pausing or pivoting rate hikes, bringing stocks off lows of the day.

The labor market strength that has been seen in the midst of a hiking cycle is unprecedented, he said.

—Carmen Reinicke

Big declines for Silvergate, Bed Bath & Beyond highlight midday movers

Here are some of the biggest stock moves during Thursday's trading session:

Silvergate — Shares of the crypto-focused bank tumbled more than 42% after Silvergate disclosed massive customer withdrawals during the fourth quarter. The bank said it $3.8 billion in assets from digital asset customers at the end of December, down more than 60% from three months earlier. The company also sold off more the $5 billion of debt securities to cover the withdrawals, resulting in a loss on those sales of $718 million.

Bed Bath & Beyond — The home goods retailer plummeted 24% after reporting it's running out of cash and is considering bankruptcy, citing weaker-than-expected sales. The company said it is exploring financial options including restructuring, seeking additional capital or selling assets, in addition to a potential bankruptcy.

Lamb Weston Holdings — The food processing company jumped 9% after it smashed quarterly earnings and revenue estimates. Lamb Weston also raised its financial guidance for the full year.

Check out more movers here.

— Jesse Pound

Financial stocks struggle after solid start to 2023

A budding winning streak for financial stocks looks poised to end on Thursday as markets continue to muddle through the first week of the new year.

The Financial Select Sector SPDR Fund was down nearly 1% in afternoon trading. The fund had risen the previous two trading days of the week. The Invesco KBW Bank ETF fell about 1.3%.

Growing concern about an economic slowdown or recession has dampened enthusiasm around bank stocks, which are typically seen as beneficiaries of higher interest rates.

— Jesse Pound

Credit Suisse upgrades Cboe Global Markets, CME

Credit Suisse upgraded exchanges Cboe Global Markets and CME Group to outperform from neutral on Thursday, citing their defensive prospects and potential to grow derivatives volume.

In addition, analyst Gautam Sawant lowered his price target on Cboe to $144 from $159 due to lower target multiple valuation revisions. Still, it implies nearly 16% upside from Wednesday's close.

"Over the course of 2023, industry options volumes could expand owing to elevated uncertainty around potentially slower economic growth and, in our view, CBOE's entrenched index options complex is well positioned for growth amidst rapid customer adoption of short-dated, daily expiry and global demand for proprietary SP500/VIX options," he wrote in a note.

Meanwhile, CME's recent pullback in valuation has created an attractive entry point, Sawant added. His $191 price target implies 12% upside from Wednesday's close.

— Michelle Fox

Stocks down at midday as traders digest jobs data

The three major averages were all solidly in negative territory at the midday point Thursday following two reports on the labor market that signaled it's holding up amid the Federal Reserve's interest rate hikes.

The Dow Jones Industrial Average fell 410 points, or 1.23%. The S&P 500 and Nasdaq Composite slipped 1.12% and 1.08%, respectively, led by shares of Tesla, down more than 3%.

—Carmen Reinicke

Credit Suisse downgrades Danaher, cites slowing vaccine demand

Danaher shares slipped 2% premarket following a downgrade to neutral from an outperform rating at Credit Suisse.

"Danaher has reduced its near-term growth expectations for its Bioprocess business (~25% of 2022e sales, ex COVID testing) as COVID vaccine demand has fallen and customers reduce inventory," wrote analyst Dan Leonard in a note to clients. "We believe inventory burn could continue throughout 2023 before normalizing."

Read more on the call here.

— Samantha Subin

D.A. Davidson says it's time to buy Microsoft

Microsoft's latest investment related to artificial intelligence makes now a good time to get in on shares of the tech bellwether, according to D.A. Davidson.

Analyst Gil Luria initiated coverage of the stock with a buy rating, saying that Integrating this tool offers a "once-a-decade opportunity to unseat Google's Search dominance" in a note to clients.

Read more on the call and the artificial intelligence tool here.

— Samantha Subin

Mizuho highlights Meta and Uber as top U.S. internet stocks

Some of the biggest tech growth stories from last decade could shine again in 2023, according to Mizuho.

Analyst James Lee selected Facebook-parent Meta Platforms and Uber as the firm's top picks for U.S. internet stocks in the year ahead.

In the case of Meta, the social media company has upside from both cost reduction plans and the continued growth of the reels product on Facebook and Instagram, Mizuho said.

"The company's record of overstating expense guidance should provide potential for upside in profitability. We believe additional government oversight or regulation of TikTok could benefit Meta's Reels by weakening a significant competitor, which could improve investor sentiment," the note said.

For Uber, the business of ride-sharing as a whole appears to be improving, Mizuho said.

"We believe unit economics are favorable for US ridesharing due to lower driver incentives and customer acquisition costs, the two largest components of expenses. Uber is the category leader, and positioned to gain share on more rational competition, in our view," the note said.

Both stocks were modestly lower in morning trading on Thursday.

— Jesse Pound, Michael Bloom

Bank of America double-downgrades Ally Financial

Ally Financial shares shed more than 4% before the bell after Bank of America double-downgraded the stock to underperform from a buy rating.

"Rising interest rates are pushing funding costs higher while simultaneously causing loan demand to slow," wrote analyst Brandon Berman. "Moreover, we think investors will need to see evidence of credit quality performing better than expected before rewarding shares."

CNBC Pro subscribers can read more on the call here.

— Samantha Subin

Stitch Fix shares jump 5% on layoffs, CEO turnover announcement

Shares of Stitch Fix jumped 5% Thursday after the company announced that it would cut 20% of its salaried workforce.

In addition, founder Katrina Lake will resume her post as CEO on an interim basis and lead the search for the next chief executive of the clothing company. Current CEO Elizabeth Spaulding, who joined in 2020, will step down immediately.

—Carmen Reinicke

Five stocks post 52-week highs, three notch lows

As the first hour of trading got into full swing, some stocks were hitting levels not seen in at least a year.

Five stocks hit 52-week highs. They are: