Stock Market Update

[BRIEFING.COM] The stock market was in a steady decline through most of the session so far. The major indices have plateaued near session lows in recent action. The downbeat action follows this morning's release of the August Employment Situation report.

Hiring activity was lighter than expected in August and there were downward revisions to July and June that left employment 86,000 lower for those months than previously reported. On the other hand, the unemployment rates declined slightly and average hourly earnings increased a stronger than expected 0.4% month-over-month, which should be helpful for spending.

The report was weak enough to fuel additional selling on this downbeat week for equities, but not weak enough to convince participants that the FOMC will cut rates by 50 basis points at the September 17-18 FOMC meeting. The fed funds futures market now sees a 25.0% probability of a 50 basis points cut this month, down from 41.0% in front of the data, according to the CME FedWatch Tool.

The stock market is also reacting to Broadcom's (AVGO 139.11, -13.70, -9.0%) relatively disappointing guidance, which is driving selling interest in semiconductor shares and mega caps. The PHLX Semiconductor Index (SOX) sports a 4.3% decline and the Vanguard Mega Cap Growth ETF (MGK) shows a 1.9% decline. 

The 10-yr note yield was at 3.65% earlier, but sits at 3.73% now. The 2-yr note yield is down five basis points to 3.70%.

Reviewing today's economic data:

• August Nonfarm Payrolls 142K (Briefing.com consensus 165K); Prior was revised to 89K from 114K, August Nonfarm Private Payrolls 118K (Briefing.com consensus 142K); Prior was revised to 74K from 97K, August Avg. Hourly Earnings 0.4% (Briefing.com consensus 0.3%); Prior 0.2%, August Unemployment Rate 4.2% (Briefing.com consensus 4.2%); Prior 4.3%, August Average Workweek 34.3 (Briefing.com consensus 34.3); Prior 34.2
  • The key takeaway from the report is that it was not as good as hoped, but it also wasn't as bad as feared. It was a report, however, that meshes with the understanding that there is a slowdown in hiring activity that should translate into a slowdown for the economy.