Closing Stock Market Summary
The stock market experienced some turbulence on the back of yesterday's gains. Unlike yesterday, there was a disconnect between the stock market and Treasury yields, which is to say that stocks languished despite a modest drop in yields.
The major indices were able to close well off their lows of the day, albeit with modest declines, thanks to some mega cap stocks recovering from early losses. The Vanguard Mega Cap Growth ETF (MGK) rose 0.1% while the market-cap weighted S&P 500 fell 0.1%. Meanwhile, the Invesco S&P 500 Equal Weight ETF (RSP) saw a 0.3% decline.
The Russell 2000 for its part closed with a 0.1% gain, drawing some support from its regional bank components. On a related note, the SPDR S&P Regional Banking ETF (KRE) rose 1.7% today.
Buyers were seemingly hesitant in front of the September jobs report on Friday at 8:30 a.m. ET. The labor report follows this morning's release of the weekly initial jobless claims report, which showed a low level of initial claims (207,000) that is typically associated with a tight labor market and an economy running at a healthy clip.
Treasuries had a volatile response to the data, but calmed down fairly quickly. The 10-yr note yield was at 4.71% just before the release and jumped to 4.77% in the immediate aftermath. It settled the day at 4.71%, which is down three basis points from yesterday. The 2-yr note yield was at 5.02% just before 8:30 a.m. ET and jumped to 5.07% in response to the data, ultimately settling the session six basis points lower at 5.03%.
Seven of the 11 S&P 500 sectors registered a decline, but the consumer staples sector (-2.1%) was the worst performer by a wide margin due in part to a big loss in Clorox (CLX 124.93, -6.90, -5.2%) following its disappointing guidance. The materials sector (-1.3%) was the next worst performer.
The real estate (+0.7%), health care (+0.5%), financials (+0.4%), and information technology (+0.3%) sectors were alone in the green at the close.
Separately, WTI crude oil futures extended their losses today, dropping another 2.9% to $82.29/bbl. That weakness, along with the decline in Exxon Mobil (XOM 108.99, -2.51, -2.3%), drove the underperformance of the energy sector (-0.6%).
- Nasdaq Composite: +26.3% YTD
- S&P 500: +10.9% YTD
- S&P Midcap 400: +0.2% YTD
- Dow Jones Industrial Average: -0.1% YTD
- Russell 2000: -1.7% YTD
Reviewing today's economic data:
- Weekly Initial Claims 207K (consensus 225K); Prior was revised to 205K from 204K; Weekly Continuing Claims 1.664 mln; Prior was revised to 1.665 mln from 1.670 mln
- The key takeaway from the report is the understanding that the low level of initial claims is associated not only with a tight labor market, but also an economy running at a good pace.
- August Trade Balance -$58.3 bln (consensus -$65.1 bln); Prior was revised to -$64.7 bln from -$65.0 bln
- The key takeaway from the report is that the drop in imports in August, versus the increase in exports, will factor favorably as an input to Q3 GDP computations.
Friday's economic calendar features:
- 08:30 ET: September Nonfarm Payrolls ( consensus 158K; prior 187K)
- 08:30 ET: September Nonfarm Private Payrolls ( consensus 150K; prior 179K)
- 08:30 ET: September Unemployment rate (consensus 3.7%; prior 3.8%)
- 08:30 ET: September Average Hourly Earnings ( consensus 0.3%; prior 0.2%)
- 08:30 ET: September Average Workweek ( consensus 34.4; prior 34.4)
- 15:00 ET: August Consumer Credit ( consensus $12.0B; prior $10.4B)