By Arathy Somasekhar

(Reuters) – Oil prices steadied in early trade on Tuesday after sliding in the previous session, as markets weighed Middle East tensions against demand worries and rising OPEC supply.

Brent crude futures rose 18 cents, or 0.2%, to $76.30 a barrel at 0122 GMT, while U.S. West Texas Intermediate crude futures inched up 6 cents, or 0.1%, to $70.83 a barrel.

The benchmarks had fallen over 3% and 4% respectively on Monday on sharp price cuts by top exporter Saudi Arabia and a rise in OPEC output.

However, concerns persist about the Gaza war. The Israeli military has said its fight against Hamas will rage through 2024, worrying markets that the conflict could grow into a regional crisis that could disrupt Middle Eastern oil supplies.

U.S. Secretary of State Antony Blinken arrived in Tel Aviv late on Monday to brief Israeli officials on his two days of talks with Arab leaders on ending the war.

Holding back price gains however, a Reuters survey on Friday found that OPEC oil output rose in December as increases in Angola, Iraq and Nigeria offset continuing cuts by Saudi Arabia and other members of the wider OPEC+ alliance.

Higher supply has also prompted Saudi Arabia to cut the February official selling price of its flagship Arab Light crude to Asia to the lowest level in 27 months.

Supporting prices, the dollar paused its rally on Tuesday, as traders reaffirmed their bets for a slew of Federal Reserve rate cuts this year. A weaker dollar boosts oil prices as crude becomes cheaper for holders of other currencies.

Federal Reserve Governor Michelle Bowman on Monday said she now sees U.S. monetary policy as “sufficiently restrictive” and signalled her willingness to support eventual interest-rate cuts as inflation eases.

The market is awaiting U.S. inventory data from the American Petroleum Institute industry group later in the day.

(Reporting by Arathy Somasekhar in Houston; Editing by Sonali Paul)

By Patrick Wingrove

SAN FRANCISCO (Reuters) – Germany’s Bayer will continue its expansion into the U.S. despite its November announcement that its promising blood thinner candidate failed to demonstrate superiority over a competing medicine, the drugmaker’s pharmaceuticals head Stefan Oelrich said on Monday.

Bayer’s experimental anticoagulant asundexian could still be a blockbuster if its second trial for stroke prevention reads out positively, Oelrich told Reuters at the JPMorgan health conference in San Francisco.

He said there is also strong opportunity in the U.S. for the company’s cardiovascular and menopause symptom relief treatments, including its experimental elinzanetant, which Bayer said on Sunday eased hot flashes and improved sleep in late-stage trials.

“When you look at any of the opportunities that we’re talking about (in those areas), typically the reward for innovation in the U.S. is superior to the one in Europe,” he said.

Bayer announced in late November that asundexian was shown to be inferior to Bristol-Myers Squibb and Pfizer’s established Eliquis in preventing strokes in high-risk patients part-way into a late-stage trial called OCEANIC-AF.

The company earlier that month said it started a trial called OCEANIC-AFINA to test the experimental blood thinner in patients with a trial fibrillation who are ineligible for oral anticoagulant treatment because of increased risk of bleeding.

Oelrich said Bayer still plans to sell the drugs it is developing itself in the country, rather than partner with U.S. companies like it has in the past.

Bayer executive Sebastian Guth told Reuters last March that the drugmaker intended to move away from relying on partners in the U.S. and planned to spend $1 billion on drug research and development in the country in 2023.

Oelrich declined to say whether Bayer would revise its 5 billion euro forecast for asundexian after its trial setback.

(Reporting by Patrick Wingrove; Editing by Michael Perry)

By Joey Roulette

WASHINGTON (Reuters) – NASA is set to delay its next few missions to the moon under a key program as technical hurdles mount with the various spacecraft it intends to use to get there, according to four people familiar with NASA’s plans.

The U.S. space agency is expected to announce the plans on Tuesday after spending months tracking progress with contractors and considering changes to the Artemis program, a multi-billion dollar effort that includes returning the first astronauts to the moon since the last Apollo mission in 1972.

NASA’s second Artemis mission is expected to be pushed beyond its planned late-2024 target after issues were uncovered with the Lockheed Martin-built Orion crew capsule’s batteries during vibration tests, two of the people said. The batteries will need to be replaced.

This would have been the first flight with humans aboard after launching the capsule uncrewed atop NASA’s Space Launch System in a 2022 inaugural test.

Artemis 3 – planned to be the first mission landing humans on the moon in late 2025 using the Starship landing system from NASA contractor SpaceX – will likewise be pushed back. Billionaire Elon Musk’s SpaceX is taking longer than expected to reach certain development milestones, all four people said.

NASA declined to comment. Lockheed and SpaceX did not immediately return requests for comment.

Senior NASA officials in recent months have been mulling plans to move the inaugural Artemis astronaut landing to the fourth mission, giving SpaceX and other contractors more practice before making the first such landing in half a century.

NASA officials presented that option to the agency’s senior leadership last month, but it could not be determined if it chose that path. It was also unclear what the new target dates for the initial Artemis missions would be.

NASA’s Artemis program relies heavily on private companies. It will use the Boeing and Northrop Grumman-led Space Launch System to loft humans off Earth, Lockheed’s Orion capsule to propel them toward the moon and SpaceX’s Starship to take them on and off the lunar surface.

Billionaire Jeff Bezos’ Blue Origin is also developing an astronaut lander for later missions.

Complex development milestones with SpaceX’s giant Starship system include the company’s plan to refuel Starship at an orbital propellant depot before the ship can take humans to the lunar surface and launch them back with enough fuel.

NASA is eager to see SpaceX make progress on the orbital refueling plan, seeing it as a potential bottleneck that entails the delicate transfer of thousands of gallons of supercooled, flammable propellants in orbit, three of the people said.

(Reporting by Joey Roulette; Editing by Christopher Cushing)

By Anant Chandak

BENGALURU (Reuters) – The Bank of Korea will keep its key policy rate unchanged at 3.50% for an eighth consecutive meeting on Thursday as inflation eases and until at least Q3 despite some concerns around financial stability, a Reuters poll found.

With inflation currently at 3.2%, above the central bank’s 2% target, and the Korean won down around 1.8% against the dollar so far this year, the BOK is unlikely to change its hawkish stance anytime soon.

However, Governor Rhee Chang-yong said in a New Year speech the BOK would adopt a “policy mix” to bring down inflation and needed to prepare for the possibility of financial uneasiness that may be triggered by monetary policy remaining restrictive.

All 38 economists in the Jan. 3-8 Reuters poll expected the BOK to leave the base rate unchanged at 3.50% on Jan. 11.

“They (the BOK) will freeze the policy rate for the time being, but are likely to loosen their stance a bit,” said Stephen Lee, chief economist at Meritz Securities Research Center.

“The most likely scenario for the BOK’s pivot will be in 2H24. By then, both headline and core inflation will fall below 2.5%…increasing the need for policy support related to a soft-landing. The problem can be bigger if interest rates remain higher throughout the year.”

According to the central bank, inflation was expected to return to its target in late 2024.

Median forecasts showed interest rates remaining on hold until end-Q2, followed by 25 basis-point cuts in each of the remaining two quarters of this year, unchanged from a November poll.

Among those who had forecast through Q3, nearly half or 11 of 24 economists expected interest rates to fall to 3.25%. While 10 saw them at 3.00%, two predicted no change at 3.50% and one saw rates at 2.75%.

If realised, the BOK’s easing cycle for this year would be shallower than what is expected from the U.S. Federal Reserve, one of Korea’s largest trading partners.

“There is not enough reason for the BOK to begin easing earlier. Healthier exports should mitigate weaker domestic demand following the BOK’s restrictive monetary policy while the government’s fiscal policy can provide selective support for the weaker segments of the economy,” noted Jin Choi, economist at HSBC.

“We think the Board will likely retain its cautious stance mainly for two reasons. Firstly, we are not in for fast disinflation ahead. Moreover, the BOK has been stressing the risk of accumulated cost pressures faced by various domestic producers.”

Economic growth will improve this year, averaging 2.1% in 2024 from 1.4% last year, BOK estimates showed.

(For other stories from the Reuters global economic poll:)

(Reporting by Anant Chandak; Polling by Milounee Purohit in BENGALURU and Jihoon Lee in SEOUL; Editing by Jonathan Cable, Hari Kishan and Sharon Singleton)

By Max A. Cherney and Abhirup Roy

SAN FRANCISCO (Reuters) – (This Jan. 4 story has been corrected to say that Bosch is scheduled to speak at CES on AI and cybersecurity, not that Bosch is expected to showcase a gun-detection system, in paragraph 9 and fixes executive’s name to Aakash Arora in paragraph 11)

OpenAI boss Sam Altman will not appear at the CES trade show in Las Vegas next week. But the generative artificial-intelligence fever his startup set off last year will be on full display as gadget makers race to find consumer uses for the technology.

In devices for the visually impaired, and safety systems involving guns at schools, to facial-recognition software that can assess vitals, and cabin-monitoring systems inside autonomous cars, dozens of companies have planned announcements for the show about how they are building AI into their gadgets.

CES 2024, formerly known as the Consumer Electronics Show, runs Jan. 9-12.

OpenAI’s influence at the show despite Altman’s physical absence is reminiscent of Apple and its founder Steve Jobs, whose clout was felt despite him avoiding the show, with many firms jockeying to display gadgets compatible with the company’s sleek products.

Altman is widely regarded as the poster child for the AI frenzy that has gripped the tech industry for the past year. He made headlines in November when he was briefly ousted by the ChatGPT maker’s board, and reinstated days later after more than 700 employees threatened to quit and join OpenAI investor Microsoft in solidarity.

Among other projects, OpenAI is working on a secretive AI hardware project with famed former Apple designer Jony Ive, according to media reports.

Funding for generative AI projects exploded last year, surging more than fivefold to $23.78 billion through the beginning of December from 2022, according to PitchBook data.

“It’s the year of AI in everything,” said Maribel Lopez, tech analyst at Lopez Research. “If you don’t have AI in your product, don’t show up, it’s not worth talking about.”

Germany’s Bosch, which recently won a CES award for a near-invisible gun-detection system that pairs video and audio AI for proactive security involving firearms at schools, is scheduled to speak on AI and cybersecurity at a panel in the show. Japan’s NEC will unveil AI software that enables mobile devices to analyze face patterns and pupil conditions to estimate human vitals and mental state.

A slew of companies is expected to show off how using AI in vehicles is making them smoother and safer for drivers through better in-vehicle virtual assistants and cabin monitors.

The new focus area for automakers after years of investment into autonomous technology that used AI is technology that allows a “hyper personalized” experience while buying and driving cars, said Aakash Arora, a managing director at Boston Consulting Group.

“They’re trying to figure out ‘if I could get to this level of customer experience it can really differentiate me in the market,’” he said of companies in the auto industry.

For instance, Cerence, which makes AI-powered virtual assistants, is set to announce a partnership with Volkswagen, and Israel-based Cipia is expected to unveil a system that monitors signs of distraction and drowsiness in drivers.

Many automakers are also adopting AI in various stages of production to reduce costs, said Wendy Bauer, vice president of automotive and manufacturing at Amazon Web Services, which counts BMW and Toyota as customers. AI can help carmakers save money by speeding up vehicle development and ensuring better quality checks during manufacturing, she said.

PC and smartphone makers are also likely to showcase how their products use AI, which chipmakers including Intel and AMD are betting will offer a new revenue stream. Microsoft said on Thursday that PCs with a new AI button on the Windows keyboard will be on display at the show.

But it is not clear whether consumers will pay extra for AI capabilities on their computers because these developments perform less obvious tasks than OpenAI’s ChatGPT bot.

“Consumers love ChatGPT, but the consumer benefit of having it on a device isn’t clear,” said Jay Goldberg, chief executive of D2D Advisory. “That’s why everyone is going to talk about it – because everyone is scrambling for the consumer utility.”

(Reporting by Max A. Cherney and Abhirup Roy in San Francisco; Editing by Sayantani Ghosh and Matthew Lewis)

By Chuck Mikolajczak

NEW YORK (Reuters) -The Nasdaq scored its first gain of at least 1% in 2024 on Monday, as a fall in Treasury yields helped lift megacap stocks, while a sharp drop in Boeing shares kept gains on the Dow Industrials in check.

Megacaps advanced, lifting stocks such as Amazon.com which closed up 2.66% and Alphabet, which rose 2.29%, as Treasury yields fell ahead of readings on inflation and a new supply of government debt this week, with the benchmark 10-year U.S. Treasury yield hitting a low of 3.966% on the session.

In addition, Apple climbed 2.42% after the iPhone maker said its Vision Pro mixed-reality device will be available for sale from Feb. 2 in the United States.

Nvidia surged 6.3% and fellow chipmaker Advanced Micro Devices jumped 5.48%, helping to push the Philadelphia SE Semiconductor Index up 3.28% as it bounced from a 5.8% drop last week, its biggest weekly percentage fall since October 2022.

“This is definitely a yield-driven market for now and investors are trying to discount when and how many rate cuts we will see, the timing and the magnitude of rate cuts,” said Bill Merz, head of capital markets research at U.S. Bank Wealth Management in Minneapolis.

“Now we’re probably in a more rational place in terms of yields and it’s a question of, is the market getting that right and are yields falling for the right reasons or the wrong reasons? And investors have so far taken the view that yields are falling for all the right reasons, that the Fed is navigating what thus far has been a soft landing.”

The Dow Jones Industrial Average rose 216.90 points, or 0.58%, to 37,683.01, the S&P 500 gained 66.30 points, or 1.41 %, to 4,763.54 and the Nasdaq Composite gained 319.70 points, or 2.20%, to 14,843.77.

The gains on the Nasdaq and S&P 500 marked their first daily percentage climbs of more than 1% since Dec. 21 and biggest one-day percentage advances since Nov. 14.

Meanwhile, Boeing shares plunged 8.03% after the plane maker and U.S. regulators gave the go-ahead on Monday for airlines to inspect jets that were grounded after a panel blew off an Alaska Airlines-operated 737 MAX 9 in mid-flight which forced a dramatic landing of the airliner over the weekend.

The S&P 500 energy index was the sole decliner among the 11 S&P 500 sectors, falling 1.16% after hitting its lowest level in a month as crude prices sank about 4% after sharp price cuts by top exporter Saudi Arabia and a rise in OPEC output.

On Friday, the benchmark S&P 500 snapped a nine-week streak of gains, as investors dialed back expectations on the possible aggressiveness of the Federal Reserve in cutting interest rates this year following a mixed bag of economic data on the labor market and services sector.

Atlanta Fed President Raphael Bostic said on Monday that the central bank’s dual goals of lowering inflation and maintaining low unemployment are not yet in conflict.

Money markets now see a 63.8% chance of at least a 25 basis-point (bps) rate cut as soon as March, according to CME’s FedWatch Tool, down from 88.5% a week ago.

Investors will eye inflation data this week in the form of the consumer price index (CPI) and producer price index (PPI) to shape expectations for the path of interest rates by the Fed.

Advancing issues outnumbered decliners by a 3-to-1 ratio on the NYSE while on the Nasdaq, advancing issues outnumbered decliners by a 2.3-to-1 ratio.

The S&P 500 posted 13 new 52-week highs and no new lows while the Nasdaq recorded 101 new highs and 92 new lows.

(Reporting by Chuck Mikolajczak in New YorkEditing by Matthew Lewis)

By Jeff Mason and Steve Holland

VALLEY FORGE, Pennsylvania (Reuters) – Joe Biden on Friday accused Republican Donald Trump, his likely 2024 election opponent, of instigating the Jan. 6 attacks and plotting revenge on those seeking to punish him, as the president put the future of U.S. democracy at the center of his bid for re-election.

“He told the crowd to fight like hell. And all hell was unleashed,” Biden said of the 2021 attack. “Then as usual he left the dirty work to others. He retreated to the White House.”

Biden marked three years since the Jan. 6, 2021, attacks with his first major campaign speech of the year, applying the heat on Trump as he pushes against questions about his handling of the U.S. economy and his age, 81. Trump is 77.

Whether Biden’s Friday speech will make an impact 10 months before Election Day – in a politically polarized country where voters get news and information from wildly different sources – remains to be seen.

But it set the tone and laid out the stakes of what is likely to be a bitter battle. Biden characterized Trump and his followers as dangerous outliers and asked Democrats, independents and “mainstream Republicans” who cherish U.S. democracy to back him.

“Democracy is on the ballot. Your freedom is on the ballot,” he said.

Biden said Trump’s re-election bid is based on trying to seek “revenge and retribution” against his political enemies. He reminded Americans that Trump has called his opponents “vermin,” the “same exact language used in Nazi Germany.”

“How dare he? Who in God’s name does he think he is?” said Biden, lowering his voice to a whisper.

Trump, president from 2017 to 2021, who is leading the field for the Republican nomination for president, contested his defeat in the 2020 election, prompting thousands of his supporters to attack the U.S Capitol on Jan. 6, 2021. The failed bid to stop formal certification of the result resulted in the deaths of five people and injured dozens of police officers.

Biden also criticized Republicans for changing their tone on Trump, saying that when the attacks of Jan. 6 on the U.S. Capitol took place, “there was no doubt about the truth” and that some Republican members of Congress and Fox News commentators had publicly and privately condemned the uprising.

“But now as time has gone on — politics, fear, money – have all intervened. And those MAGA voices who know the truth about Trump and January 6th have abandoned the truth and abandoned our democracy,” Biden said.

Republicans challenging Trump in the 2024 nominating contest have mostly steered clear of criticizing Trump’s actions on that day, as opinion polls show Republican voters are less likely to blame Trump for his actions on Jan. 6 than they were three years ago.

Before his speech at a community college in Blue Bell, Pennsylvania, Biden took a tour of the Valley Forge site of George Washington’s Revolutionary War-era winter headquarters in the bitterly cold months of late 1777 and early 1778.

In his speech, Biden contrasted Trump’s bid to hang on to power to the example set by Washington, who stepped down willingly after two terms as he first U.S. president.

Biden returned again and again to Jan. 6, including a vivid description of what transpired that day, including protestors calling for the hanging of then-Vice President Mike Pence. People died because Trump’s lies “brought a mob to Washington,” he said.

In excerpts of a speech expected in Sioux Center, Iowa, later Friday, Trump called Biden’s record “an unbroken streak of weakness, incompetence, corruption and failure. That’s why Crooked Joe is staging his pathetic fearmongering campaign event in Pennsylvania today.”

Ahead of Biden’s speech, the Trump campaign released an ad accusing Biden of being “the true destroyer of democracy” citing special counsel Jack Smith’s investigation into Trump’s actions on Jan. 6.

Smith, a veteran prosecutor known for pursuing mob bosses, has charged Trump with conspiring to illegally subvert the results of the 2020 election. Trump has been charged in four separate criminal cases, with his first trial likely as soon as March.

Biden’s attorney general Merrick Garland said Friday his department was “upholding the rule of law and we are protecting the American people.” Biden has declined to comment on Trump’s legal troubles but has said he has no doubt that the Republican supported insurrection.

As president, Biden has warned about the future of U.S. democracy before, including on the first anniversary of Jan. 6, and in a fiery Sept. 2022 speech where he called Trump and his Republican followers extremists who threatened to take the country backward.

The 2024 race is expected to be closely contested, and Biden aides see Pennsylvania, home to Biden’s Scranton birthplace, as a must-win state. He won in 2020 with 50.01% of the vote. In 2016, Trump won Pennsylvania with 48.58% of the vote.

Biden’s arguments have done little to soothe his own supporters’ concerns about the state of the economy or his age, 81.

(This story has been refiled to remove an extraneous word in paragraph 10)

(Reporting by Jeff Mason and Trevor Hunnicutt; Additional reporting by Andrew Goudsward; Writing by Steve Holland; Editing by Heather Timmons, Jonathan Oatis and Alistair Bell)

(Deletes extraneous word “said” from paragraph 10)

By Jeff Mason and Steve Holland

VALLEY FORGE, Pennsylvania (Reuters) -Joe Biden on Friday accused Republican Donald Trump, his likely 2024 election opponent, of instigating the Jan. 6 attacks and plotting revenge on those seeking to punish him, as the president put the future of U.S. democracy at the center of his bid for re-election.

“He told the crowd to fight like hell. And all hell was unleashed,” Biden said of the 2021 attack. “Then as usual he left the dirty work to others. He retreated to the White House.”

Biden marked three years since the Jan. 6, 2021, attacks with his first major campaign speech of the year, applying the heat on Trump as he pushes against questions about his handling of the U.S. economy and his age, 81. Trump is 77.

Whether Biden’s Friday speech will make an impact 10 months before Election Day – in a politically polarized country where voters get news and information from wildly different sources – remains to be seen.

But it set the tone and laid out the stakes of what is likely to be a bitter battle. Biden characterized Trump and his followers as dangerous outliers and asked Democrats, independents and “mainstream Republicans” who cherish U.S. democracy to back him.

“Democracy is on the ballot. Your freedom is on the ballot,” he said.

Biden said Trump’s re-election bid is based on trying to seek “revenge and retribution” against his political enemies. He reminded Americans that Trump has called his opponents “vermin,” the “same exact language used in Nazi Germany.”

“How dare he? Who in God’s name does he think he is?” said Biden, lowering his voice to a whisper.

Trump, president from 2017 to 2021, who is leading the field for the Republican nomination for president, contested his defeat in the 2020 election, prompting thousands of his supporters to attack the U.S Capitol on Jan. 6, 2021. The failed bid to stop formal certification of the result resulted in the deaths of five people and injured dozens of police officers.

Biden also criticized Republicans for changing their tone on Trump, saying that when the attacks of Jan. 6 on the U.S. Capitol took place, “there was no doubt about the truth” and that some Republican members of Congress and Fox News commentators had publicly and privately condemned the uprising.

“But now as time has gone on — politics, fear, money – have all intervened. And those MAGA voices who know the truth about Trump and January 6th have abandoned the truth and abandoned our democracy,” Biden said.

Republicans challenging Trump in the 2024 nominating contest have mostly steered clear of criticizing Trump’s actions on that day, as opinion polls show Republican voters are less likely to blame Trump for his actions on Jan. 6 than they were three years ago.

Before his speech at a community college in Blue Bell, Pennsylvania, Biden took a tour of the Valley Forge site of George Washington’s Revolutionary War-era winter headquarters in the bitterly cold months of late 1777 and early 1778.

In his speech, Biden contrasted Trump’s bid to hang on to power to the example set by Washington, who stepped down willingly after two terms as he first U.S. president.

Biden returned again and again to Jan. 6, including a vivid description of what transpired that day, including protestors calling for the hanging of then-Vice President Mike Pence. People died because Trump’s lies “brought a mob to Washington,” he said.

In excerpts of a speech expected in Sioux Center, Iowa, later Friday, Trump called Biden’s record “an unbroken streak of weakness, incompetence, corruption and failure. That’s why Crooked Joe is staging his pathetic fearmongering campaign event in Pennsylvania today.”

Ahead of Biden’s speech, the Trump campaign released an ad accusing Biden of being “the true destroyer of democracy” citing special counsel Jack Smith’s investigation into Trump’s actions on Jan. 6.

Smith, a veteran prosecutor known for pursuing mob bosses, has charged Trump with conspiring to illegally subvert the results of the 2020 election. Trump has been charged in four separate criminal cases, with his first trial likely as soon as March.

Biden’s attorney general Merrick Garland said Friday his department was “upholding the rule of law and we are protecting the American people.” Biden has declined to comment on Trump’s legal troubles but has said he has no doubt that the Republican supported insurrection.

As president, Biden has warned about the future of U.S. democracy before, including on the first anniversary of Jan. 6, and in a fiery Sept. 2022 speech where he called Trump and his Republican followers extremists who threatened to take the country backward.

The 2024 race is expected to be closely contested, and Biden aides see Pennsylvania, home to Biden’s Scranton birthplace, as a must-win state. He won in 2020 with 50.01% of the vote. In 2016, Trump won Pennsylvania with 48.58% of the vote.

Biden’s arguments have done little to soothe his own supporters’ concerns about the state of the economy or his age, 81.

(Reporting by Jeff Mason and Trevor Hunnicutt; Additional reporting by Andrew Goudsward; Writing by Steve Holland; Editing by Heather Timmons, Jonathan Oatis and Alistair Bell)

By David French

(Reuters) -U.S. stock indexes endured a topsy-turvy session on Friday but ultimately closed marginally higher, although the small gains did not stop the S&P 500 and Nasdaq Composite from starting 2024 with their worst weekly showing in months.

All three benchmarks recorded their first weekly declines for ten weeks: the S&P 500 dropped 1.54%, while the Nasdaq Composite slumped 3.26%, and the Dow Jones Industrial Average dipped 0.59%.

For the S&P 500, it was its worst weekly performance since late October, while the Nasdaq posted its worst week since late September.

Investors have been cautious in the opening sessions of 2024, as they awaited further clarity on when interest rate cuts will begin, and how quickly they will happen.

Hopes for a swift pace of easing had triggered a blistering rally in the final weeks of 2023, which took the S&P 500 to within 1% of its all-time high, so any undermining of that hypothesis has been a cue for profit-taking.

“For now, it probably looks like a healthy correction for a market that was overbought at the end of last year,” said Greg Boutle, head of US equity & derivative strategy at BNP Paribas.

Friday’s session saw markets gyrate throughout the day, as investors absorbed the latest macroeconomic data which offered contrasting views on when interest rate cuts may begin.

Initially, robust jobs data in a report from the Labor Department, which showed U.S. employers hired more workers than expected in December, doused expectations of rapid easing of interest rates, pushing futures lower.

However, a survey from the Institute for Supply Management (ISM) then showed activity in the services sector fell in December, pointing to a weaker economy. That encouraged those betting on rapid easing, sending markets higher through the morning and into the afternoon.

Despite further undulations in the afternoon, ultimately the three benchmarks eked out a winning finish to the day – the first positive sessions of 2024 for the S&P and Nasdaq.

“In terms of the macro data, I think there’s something for everybody, in terms of the data that we’re seeing,” said BNP’s Boutle.

He added though that this week’s data releases were unlikely to have convinced anyone to have changed their minds from their position on rate-cuts coming into the year.

Traders see a 66.4% chance of at least a 25-basis point cut in March, according to the CME Group’s FedWatch tool.

The yield on the benchmark U.S. Treasury 10-year note, reflecting interest rate expectations, finished the week at 4.05%. [US/]

The financials index led gainers among the S&P 500 sectors, rising 0.5%, as banks continued to perform well ahead of the start of earnings season next week.

Large regional banks were buoyant, with Zions Bancorporation, Citizens Financial Group and Comerica Inc all rising between 2.6% and 3.3%. The S&P Banks index gained 1.3%, hitting an 11-month high.

On Friday, the S&P 500 gained 8.56 points, or 0.18%, to end at 4,697.24 points, while the Nasdaq Composite gained 13.77 points, or 0.09%, to 14,524.07. The Dow Jones Industrial Average rose 25.77 points, or 0.07%, to 37,466.11.

Applied Therapeutics tumbled 40.6% after the drug developer’s heart disease drug showed disappointing results in a late-stage trial.

Palantir Technologies lost 1.7% after Jefferies downgraded the data analytics firm to “underperform” on high stock valuations.

Peloton jumped 9.6% after the fitness equipment maker said it will bring its workout content to short-form video platform TikTok in an exclusive partnership.

The volume on U.S. exchanges was 11.2 billion shares, compared with the 12.3 billion average over the last 20 trading days.

(Reporting by Johann M Cherian and Shristi Achar A in Bengaluru and David French in New York; Editing by Devika Syamnath and Aurora Ellis)

By Herbert Lash and Naomi Rovnick

NEW YORK/LONDON (Reuters) -Bond prices slid and a gauge of global equity performance closed a tad higher in choppy trading on Friday after a surprisingly strong U.S. labor report increased the odds that the Federal Reserve can engineer a “soft landing” for the economy.

U.S. employers hired more workers than expected last month while raising wages at a solid clip, leading markets to initially dial back bets the Fed would start cutting interest rates in March.

But a weak report from the Institute for Supply Management (ISM) that showed service sector employment plunged to 43.3 in December to the lowest level since July 2020 lifted the rate cut outlook a bit, before settling little changed.

The ISM non-manufacturing Purchasing Managers Index fell to 50.6 last month from 52.7 in November. A reading above 50 indicates expansion and one below that number shows contraction.

The ISM report was weaker than expected, but there is some volatility associated with it, said Russell Price, chief economist at Ameriprise Financial Services in Troy, Michigan.

“That’s another sign that the economy is moderating. But again, that’s good that it’s moderating down to a sustainable pace,” Price said. “It supports the case that the Fed is doing a good job of raising the odds of the soft landing.”

Futures traders on Friday saw a 66.4% chance of the Fed in March starting to lower its benchmark overnight interest rate from the current 5.25% to 5.50% range, according to the CME Group’s FedWatch Tool. That’s one-tenth of percentage point higher than Wednesday.

Stocks on Wall Street rebounded after an initial decline, lifting MSCI’s broadest index of world stocks 0.16%. Prices for Treasuries, which move inversely to their yield, rebounded at first, too, but later declined.

The U.S. unemployment report was “a sizable positive surprise that indicated the domestic economy continues to do well and expand,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York.

“At least for now, it reversed the profit-taking that the market has experienced during this first week of the year.”

The Fed is hoping to drive inflation back down to its 2% target without triggering a recession or a sharp rise in unemployment, a scenario dubbed the “soft landing” by policymakers and financial markets.

The yield on the benchmark 10-year note rose 6 basis points to 4.051%. On the week, the 10-year’s yield rose 13.1 basis points, the largest weekly gain since mid-October.

The dollar index, a measure of the U.S. currency against six peers, rose 0.04% and the euro was fell 0.05% to $1.0937.

In Europe, the pan-regional STOXX 600 index closed down 0.27% while on Wall Street, the three main U.S. indices posted weekly losses for the first time in 10 weeks. The Dow Jones Industrial Average rose 0.07%, the S&P 500 gained 0.18% and the Nasdaq Composite added 0.09%.

The blistering rally for equity markets at the end of 2023 was based on expectations that the Fed, alongside significant easing by the European Central Bank, would cut rates six times this year.

The monthly nonfarm payrolls report showed the U.S. economy added 216,000 new jobs in December. Economists polled by Reuters had expected a gain of 170,000.

The jobless rate held steady at 3.7%, down from most forecasters’ expectations for it to rise, prompting concerns that the Fed’s long battle to tame inflation may have further to run.

However, future labor demand is very soft and every other piece of the unemployment report is pointing in a downward direction, said Joseph LaVorgna, chief U.S. economist at SMBC Nikko Securities in New York.

The number of private wage and salary workers has declined, overall aggregate hours, a proxy for GDP, haven’t grown for three months in a row, and temporary employment has been down for 11 straight months, he said.

“You take the headline numbers, which are a little bit better than expected, and people are drawing the incorrect conclusion that the report is strong,” LaVorgna said.

Euro zone inflation data on Friday showed prices in the currency bloc rose 2.9% on a year-on-year basis in December, up from 2.4% in November and potentially creating less urgency for the ECB to start cutting borrowing costs from record highs.

Elswhere in financial markets, Japan’s Nikkei added 0.3% as exporters got a boost from a weaker yen. A deadly New Year’s Day earthquake in Japan has also forced wagers for the ultra-dovish Bank of Japan to tighten monetary policy this month off the table.

Oil prices rose as U.S. Secretary of State Antony Blinken began a weeklong sweep through the Middle East in an attempt to contain regional tensions as the Israel-Hamas conflict rages.

U.S. crude futures rose $1.62 to settle at $73.81 a barrel and Brent futures settled up $1.17 at $78.76.

U.S. gold futures held steady after swinging up and down a percentage point on the mixed U.S. economic data. But non-interest-bearing bullion eyed its first weekly decline in four on an overall stronger dollar and higher Treasury yields.

CME gold futures settled mostly unchanged at $2,049.80 an ounce.

(Reporting by Herbert Lash; additional eporting by Naomi Rovnick, Kevin Buckland and Ankur Banerjee; Editing by Ros Russell, Mark Potter, Emelia Sithole-Matarise, Paul Simao, Jonathan Oatis and Diane Craft)