Stock Market Update

The S&P 500 futures are down 84 points and are trading 2.0% below fair value, the Nasdaq 100 futures are down 428 points and are trading 2.5% below fair value, and the Dow Jones Industrial Average futures are down 444 points and are trading 1.2% below fair value.

Nonfarm payrolls increased by a smaller-than-expected 114,000 in July, the unemployment rate increased to 4.3% from 4.1%, the U-6 unemployment rate, which also accounts for underemployed workers, rose to 7.8% from 7.4%, and average hourly earnings growth on a year-over-year basis decelerated to 3.6% from 3.8%, which isn't a lot of disposable spending breathing room above the 3.0% CPI rate for June.

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.

Treasury yields turned lower in response. The 2-yr note yield moved from 4.12% to 3.95% and the 10-yr note yield moved from 3.94% to 3.86%.