Stock Market Update

[BRIEFING.COM] The market had a mixed showing again today. The Nasdaq Composite (+0.3%) settled slightly higher than yesterday, boosted by gains in some mega cap constituents. The S&P 500 settled 0.3% lower than yesterday, below its 50-day moving average (5,506).

Mixed action persisted through the entire session due to a lack of conviction in front of the August Employment Situation Report tomorrow at 8:30 ET. The market's focus of late has been on labor market conditions, but this morning's data didn't garner outsized responses from equities or bonds.

The ADP Employment Change Report for August was weaker than expected, the weekly initial jobless claims report was better than expected, the revised Q2 productivity report had the right mix of an upward revision to productivity and a downward revision to unit labor costs, and the ISM Services PMI for August was better than expected but little changed from July.

The 10-yr note yield settled four basis points lower at 3.73% and the 2-yr note yield settled two basis points lower at 3.75%.

Today's lackluster action was also due to the understanding that the market has experienced quite a bit of consolidation this week. The S&P 500 is 2.6% lower than Friday's close, the Nasdaq Composite sits 3.3% lower than last Friday, and the Russell 2000 is down 3.9% from last week. 

Eight of the 11 S&P 500 sectors settled with declines led by health care (-1.4%), industrials (-1.2%), and financials (-1.0%). The consumer discretionary (+1.4%), communication services (+0.5%), and information technology (+0.1%) sectors were alone in positive territory at the close, reflecting mega cap leadership.

Tesla (TSLA 230.17, +10.76, +4.9%) was a winning standout from the space after a Bloomberg report that it could introduce full self-driving technology in China and Europe, pending necessary approvals, in the first quarter of 2025.

• S&P 500: +15.4% YTD
• Nasdaq Composite: +14.1% YTD
• Dow Jones Industrial Average: +8.1% YTD
• S&P Midcap 400: +7.2% YTD
• Russell 2000: +5.2% YTD

Reviewing today's economic data:

• August ADP Employment Change 99K (Briefing.com consensus 150K); Prior was revised to 111K from 122K
• Weekly Initial Claims 227K (Briefing.com consensus 236K); Prior was revised to 232K from 231K, Weekly Continuing Claims 1.838 mln; Prior was revised to 1.860 mln from 1.868 mln
  • The key takeaway from the report is that layoff activity remains relatively tame; however, so does hiring activity, evidenced by the elevated stickiness of continuing jobless claims.
• Q2 Productivity-Rev. 2.5% (Briefing.com consensus 2.3%); Prior 2.3%,Q2 Unit Labor Costs-Rev. 0.4% (Briefing.com consensus 0.9%); Prior 0.9%
  • The key takeaway from the report was the friendly inflation view embedded in the softening unit labor costs. They were up just 0.3% over the last four quarters, which is the lowest rate since the fourth quarter of 2013.
• August S&P Global US Services PMI - Final 55.7; Prior 55.0
• August ISM Non-Manufacturing Index 51.5% (Briefing.com consensus 51.0%); Prior 51.4%
  • The key takeaway from the report is that overall activity in the largest sector of the U.S. economy remains in an expansion mode, which is what the market, worried about a possible hard landing, wants to see. Slow to moderate growth, the report said, was noted across many industries.

The headline event tomorrow is the August Employment Situation report at 8:30 ET.