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:

Three stocks hit new 52-week lows:

— Alex Harring, Christopher Hayes

Tesla shares fall again

Tesla shares fell 5%, building on a steady stream of losses in recent days.

Thursday's selloff came amid news that the company delivered fewer China-manufactured electric vehicles in December over the previous month.

As of Wednesday's close, the stock is down more than 70% from its all-time highs.

— Samantha Subin

Bed Bath & Beyond's latest plunge further deflates the former meme stock's price

Bed Bath & Beyond is set to open trading below $2 per share, as the story of one of the main meme stocks of the past two years could be heading for a rough ending.

Bed Bath and Beyond saw a huge increase in volatility and trading volume in August of last year, after a filing from GameStop Chairman Ryan Cohen's investment firm showed he owned call options on the stock.

Bed Bath & Beyond closed at a high of $23.08 per share on Aug. 17.

Bed Bath & Beyond has been struggling with financial problems for years, but it did also spike above $52 per share in January 2021, during the first wave of a Reddit-fueled retail trading phenomenon.

That represented a rapid rise for the retailer's stock, which closed 2020 below $18 per share.

— Jesse Pound

Stocks open lower following stronger than expected jobs data

Stocks dipped at Thursday's open after better than expected jobs data signaled that the Fed is likely to continue raising rates.

The Dow Jones Industrial Average fell 149 points, or 0.50%. The S&P 500 and Nasdaq Composite slipped 0.51% and 0.64%, respectively.

—Carmen Reinicke

Continuing jobless claims dip, signaling labor market strength

Initial jobless claims ticked up slightly to 225,000 in the week ending Dec. 24, according to the Labor Department. But continuing claims - which count those who have been on unemployment for more than one week - dropped.

Continuing claims fell more than 24,000 to 1,569,764 in the previous week. This signals that people are finding new jobs amid a strong labor market.

—Carmen Reinicke

Cathie Wood says investors are running away from tech at a wrong time

Ark Invest's Cathie Wood believes investors are fleeing disruptive technology stocks at a time when costs are low enough to drive growth and innovation.

The innovation investor said today's stock market couldn't be more different than the one in telecom bubble in the late 1990s when technology was still immature.

— Yun Li

Bed Bath & Beyond declines after company warns of further financial troubles

Shares of Bed Bath & Beyond fell 18% in premarket trading after the company included a "going concern" clause in a securities filing.

The retailer, whose market cap has shrunk to about $200 million, said it expects to report a net loss of $385.8 million for its quarter that ended on Nov. 26, which is more than $100 million wider than the loss in the same quarter in 2021.

"The Company continues to consider all strategic alternatives including restructuring or refinancing its debt, seeking additional debt or equity capital, reducing or delaying the Company's business activities and strategic initiatives, or selling assets, other strategic transactions and/or other measures, including obtaining relief under the U.S. Bankruptcy Code. These measures may not be successful," the company said in a filing.

— Jesse Pound

ADP says payrolls rose 235,000 in December, much higher than expectations

Private payrolls rose by 235,000 in December, well ahead of the 153,000 estimate from Dow Jones and a big jump from November, ADP reported Thursday.

The payrolls processing firm said the biggest job gains came from leisure and hospitality, with 123,000, followed by professional and business services with 52,000 and education and health services, which added 42,000. The total was a big gain from November's 127,000.

There were some sectors that saw losses for the month, including trade, transportation and utilities (-24,000), natural resources and mining (-14,000) and financial activities (-12,000).

The firm also reported that wages increased 7.3% year over year, boosted by a 10.1% increase in leisure and hospitality.

—Jeff Cox

Stocks making the biggest moves premarket

Check out the companies making headlines and moves in premarket trading.

  • Walgreens Boots Alliance — The drugstore stock fell about 2% in premarket even after the company reported fiscal first quarter earnings that beat analyst estimates. The company also raised its full-year revenue outlook partly due to its U.S. health care segment's acquisition of Summit Health.
  • Amazon — Amazon's stock gained about 2% after announcing that it's cutting 18,000 jobs, becoming the latest technology company to cut back after expanding rapidly during the pandemic.
  • Silvergate Capital — Shares of crypto friendly bank Silvergate Capital tumbled more than 43% after it said digital asset deposits tumbled by $8.1 billion from Sep. 30 through the end of the year to just $3.8 billion amid a "crisis of confidence" in the sector following FTX's collapse. The bank said it was forced to sell $5.2 billion in debt to cover withdrawals and recorded a in a $718 million loss in the fourth quarter on that sale.

Read the full list here.

— Sarah Min

Amazon layoffs likely to improve sentiment on management focus, BofA says

The recent news that Amazon will layoff some 18,000 employees could boost sentiment around management's focus, according to Justin Post at Bank of America.

Still, some investors were likely hoping for deeper cuts, he wrote in a Thursday note. The firm has a buy rating and a $137 price target on Amazon.

"Overall, the headcount reduction of 18k is significant, but Amazon may still need to pull back in investment areas like Logistics, Content and Int'l to exceed the Street's $20bn in GAAP profit in 2023," he wrote.

The layoffs could also signal a weaker than expected holiday season, according to the note.

"That said, a difficult economic environment is well known, and steps to reduce costs on what appears to be bloated spend (vs 2018) opens up opportunity to bring US retail margins closer to 5% (as in 2018 vs -1% in 2022) when market conditions improve," said Post. "We also think Amazon's layoffs and stock reaction will be a good read for Alphabet, and we continue to expect Alphabet to more aggressively cut costs in 2023. Maintain Buy on Amazon."

—Carmen Reinicke

Goldman Sachs expects a 'flat and fat' market environment in 2023

Following the dismal performance of U.S. equities in 2022, Goldman Sachs sees a turning point coming in the new year. Still, the hurdle rate for investing in equities has increased until then.

That's partly because now, there is a reasonable alternative return available in bonds and cash, wrote Peter Oppenheimer in a Thursday note.

"We continue to expect a relatively 'flat and fat' market environment," he said. "Looking at the dividend yield gap in the US – the gap between the dividend yield and real bond yield – suggests that the five-year relative forward return is likely to be relatively flat between equities and bonds."

In addition, Oppenheimer noted that beyond cheap valuations, inflection points in bear markets are often signaled by a peak in interest rates.

"So, the peak in interest rates, as opposed to the peak in the rate of change in interest rates, is likely to be a crucial driver of a more sustained equity market recovery," he said.

—Carmen Reinicke

Silvergate Capital drops 20% in the premarket

Shares of Silvergate Capital were under pressure after The Wall Street Journal reported the company sold assets at a loss to cover more than $8 billion in withdrawals after the FTX implosion late last year.

The crypto-related bank has also culled 40% of its staff, according to the Journal. To be sure, Silvergate told the newspaper that it has sufficient liquidity to stay afloat, adding that it remains committed to crypto despite the recent downturn.

Silvergate Capital did not immediately respond to CNBC's request for comment.

— Fred Imbert

Coinbase falls after downgrade

Coinbase shares fell more than 1% in the premarket after Cowen downgraded the crypto exchange operator to market perform from outperform.

"There is low visibility per stabilization in retail trading volumes in 2023 following further December deterioration," the firm wrote. "Potential SEC enforcement action is elevated post-FTX with regulatory certainty unlikely until 2024."

CNBC Pro subscribers can read more here.

— Sam Subin

European markets open lower as investors focus on Fed data

European markets opened lower Thursday as global markets focus on economic data from the region, and the latest signals from the U.S. Federal Reserve on inflation and interest rates.

The pan-European Stoxx 600 was down 0.2% at the start of trading, led by a 0.5% loss in media stocks. Most sectors were in the red, but retail was up 0.7% to lead marginal gains.

- Elliot Smith

T-Mobile shares rise following preliminary customer data

Shares of telecommunications giant T-Mobile added 1.5% in after-hours trading on the back of preliminary fourth-quarter customer data.

The company added 314,000 postpaid net accounts in the fourth quarter, which is 1,000 below the same quarter a year ago and 80,000 below the third quarter of 2022.

But it added 1.82 million total postpaid customers in the quarter, beating the 1.63 million seen in the third quarter and 1.75 in the same quarter a year ago. The total number of postpaid phones was also up quarter over quarter, adding 927,000 compared with the third quarter's 854,000 and prior year's 844,000.

Postpaid phone churn was also up slightly quarter over quarter by 0.04%, coming in at 0.92%. The prior year's fourth quarter posted a 1.1% churn rate.

Industry analysts use postpaid customer data to draw conclusions about a wireless company's broader health because they pay monthly bills and tend to be more reliable customers.

Meanwhile, T-Mobile added 524,000 high-speed internet customers, which is 54,000 fewer than the prior quarter. In the fourth quarter a year ago, T-Mobile brought in just 224,000.

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— Alex Harring

Expect 'stubbornly high' inflation and a mild recession in 2023, Cresset predicts

Despite many economic indicators showing at least some signs of the economy cooling, Cresset Capital Management said to prepare for inflation to stick around this year.

"We expect inflation pressure to remain stubbornly high through 2023," the firm said in its 2023 outlook.

The firm said U.S. inflation should be able to reach 3.5% relatively easily, but hitting the 2% threshold will be challenging. It also said to expect global central banks to pivot and accept inflation at a rate that's higher than preferred, adding that inflation between 3% and 4% could be tolerated for a period.

Cresset also said it expects a mild recession in the middle of 2023 as interest rate hikes have their full effects on the economy. It said a "soft landing" scenario, which is when a recession would be avoided, is unlikely.

— Alex Harring

Luminar pops after management says company met 2022 milestones

Luminar, a maker of equipment that harnesses solar energy for electric vehicles, jumped more than 4% after the company announced new technology and said it met 2022 performance goals.

The company said it signed new series production deals for multiple vehicle models with automakers in December. Those deals exceeded targets, said company leadership, who added that all four 2022 milestones Luminar set for itself were met by the end of the year.

Luminar is also hosting the North American debut of consumers vehicles from Volvo Cars and SAIC's Rising Auto that used the company's products at the Consumer Electronics Show in Las Vegas this week.

The company also said it acquired Civil Maps, a company focused on mapping for electric vehicles. And management said the company was launching a new three-dimensional mapping software in high definition.

Luminar stock hit a 52-week low in Wednesday trading.

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— Alex Harring

Stock futures open down

Stock futures opened in the red Wednesday evening.

Dow futures shed 32 points at open, or 0.1%. S&P 500 and Nasdaq 100 futures each lost 0.1% as well.

— Alex Harring