Stock Market Update

[BRIEFING.COM] It's another mixed day in the market. There's an overall negative bias driving today's price action, but there's not a lot of conviction behind the moves. The equal-weighted S&P 500 trades 0.7% lower and decliners lead advancers by a 3-to-2 margin at the NYSE and by a 4-to-3 margin at the Nasdaq.

Still, the downside action has the S&P 500 trading below its 50-day moving average (5,506) and below the 5,500 level. The Nasdaq Composite (+0.2%), meanwhile, reclaimed a positive posture thanks to positive action in some mega cap names.

Tesla (TSLA 226.79, +7.41, +3.4%) is a standout in that respect on a Bloomberg report that it could introduce full self-driving technology in China and Europe, pending necessary approvals, in the first quarter of 2025. The Vanguard Mega Cap Growth ETF (MGK) trades fractionally higher after being down as much as 0.4% earlier.

This has boosted the S&P 500 consumer discretionary sector, which trades 1.0% higher. The only other sector sporting a gain is communication services (+0.2%), which is also benefitting from strength in its mega cap components.

The remaining nine sectors show losses ranging from 0.1% (information technology) to 1.4% (industrials). 

Investors are looking ahead to the influential August Employment Situation Report released in front of Friday's open. Fears about a potentially weakening labor market have contributed to recent selling.

This morning's data didn't garner an outsized response 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 yield is down four basis points to 3.73% and the 2-yr yield is down two basis points to 3.75%. 

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.