Stock Market Update

[BRIEFING.COM] The stock market is in retreat-mode again today with concerns about growth still top of mind for investors. The market received more disappointing economic data this morning, piling onto the notion that the economy is headed for a deeper slowdown while the Fed remains on pause.

Nonfarm payrolls increased by just 114,000 (Briefing.com consensus 170,000), the unemployment rate jumped to 4.3% from 4.1%, and average hourly earnings decelerated on a year-over-year basis to 3.6% from 3.8%.

Like yesterday, mega cap shares and semiconductor-related names are having an outsized impact on index performance. The Vanguard Mega Cap Growth ETF (MGK) is down 2.3% and the PHLX Semiconductor Index (SOX) is down 5.4%. 

This price action follows earnings news from Dow components Amazon.com (AMZN 166.18, -17.90, -9.7%) and Intel (INTC 21.02, -8.02, -27.6%). AMZN shares are reacting to weaker-than-expected Q3 revenue guidance while INTC shares are plunging after it disappointed with Q2 earnings, Q3 guidance, and news that it will be suspending its dividend and cutting more than 15% of its workforce.

Fellow Dow component, and the largest stock in the S&P 500, Apple (AAPL 224.58, +6.23, +2.8%) has gone against the grain today, trading higher after reporting quarterly results that featured better than expected earnings and revenue.

Just about everything is coming along for the downside ride. Declining issues outpace advancing issues by a 6-to-1 margin at both the NYSE and at the Nasdaq.

Growth concerns have also fueled buying in the bond market. The 2-yr note yield is down 25 basis points to 3.91% and the 10-yr note yield is down 17 basis points to 3.81%.

Reviewing today's economic data:

• July Nonfarm Payrolls 114K (Briefing.com consensus 170K); Prior was revised to 179K from 206K, July Nonfarm Private Payrolls 97K (Briefing.com consensus 153K); Prior 136K, July Avg. Hourly Earnings 0.2% (Briefing.com consensus 0.3%); Prior 0.3%, July Unemployment Rate 4.3% (Briefing.com consensus 4.1%); Prior 4.1%, July Average Workweek 34.2 (Briefing.com consensus 34.3); Prior 34.3
  • The key takeaway from the report is that it is an economic slowdown signal. How much of a slowdown will avail itself in coming months, but in the context of a market newly worried about a hard landing and the Fed making a policy mistake by keeping rates higher for longer, this report will not assuage those concerns.
• June Factory Orders -3.3% (Briefing.com consensus 0.4%); Prior -0.5%
  • The key takeaway from the report is that the weakness in factory orders was not as pronounced as the headline suggests, as the weakness was driven by transportation equipment orders, which are notoriously volatile.