Stock Market Update

The S&P 500 futures are up 25 points and are trading 0.5% above fair value, the Nasdaq 100 futures are up 51 points and are trading 0.3% above fair value, and the Dow Jones Industrial Average futures are up 66 points and are trading 0.1% above fair value.

Nonfarm business sector labor productivity increased 2.3% in the second quarter (Briefing.com consensus 1.6%) following an upwardly revised 0.4% increase (from 0.2%) in the first quarter. Unit labor costs were up just 0.9% (Briefing.com consensus 1.7%) following a downwardly revised 3.8% increase (from 4.0%) in the first quarter.

The key takeaway from the report was the moderation in unit labor costs, which the Fed is eyeing closely. Unit labor costs increased 0.5% over the last four quarters, which is the lowest rate since the third quarter of 2019.

Initial jobless claims for the week ending July 27 increased by 14,000 to 249,000 (Briefing.com consensus 233,000). Continuing jobless claims for the week ending July 20 increased by 33,000 to 1.877 million. That is the highest level since November 27, 2021.

The key takeaway from the report is the rising level of initial claims -- a leading indicator -- which connotes some softening in the labor market that is expected to curtail discretionary spending activity.

Treasury yields are lower following the data. The 10-yr note yield moved from 4.06% to 4.03% and the 2-yr note yield moved from 4.28% to 4.25%.