Closing Market Summary: Averages End Flat Ahead of Jobs ReportThe stock market ended the Thursday affair on a flat note, responding to a reversal in crude oil and exhibiting caution ahead of tomorrow's release of the Employment Situation Report for June. Other focal points impacting today's trade included strengthening in the dollar and the outperformance of the heavyweight technology (+0.3%), industrial (+0.3%), and consumer discretionary (+0.4%) sectors. The Nasdaq Composite (+0.4%) ended ahead of the S&P 500 (-0.1%) and the Dow Jones Industrial Average (-0.1%).
The major averages began the day on a modestly higher note, trading higher alongside a rebound in European bourses and a rally in crude oil. Global equity markets tilted to the upside as participants weighed dovish minutes from the Fed's June policy meeting. The central bank struck an accommodative tone, citing the need for further economic data before voting to continue policy rate normalization. The FOMC also commented that it would need to monitor conditions overseas should the United Kingdom vote to leave the European Union.
U.S. indices slipped mid-morning as investors eyed a downturn in crude oil. The energy component came under pressure after inventory data from the Department of Energy failed to impress investors. The EIA reported that crude oil inventories declined by 2.22 million barrels (consensus: between -2.3 million and -2.6 million barrels), which fell roughly in-line with expectations. However, investors were likely anticipating a larger draw after API inventory data disclosed that crude oil inventories fell by 6.73 million barrels (last: -3.86 million barrels). Furthermore, the downturn in crude oil occurred ahead of a vote by the U.S. Department of the Interior regarding offshore drilling rights in Alaska. WTI crude ended its day lower by 4.6% ($45.19/bbl; -$2.18).
The benchmark index ticked off a session low (2089.39) in the final hour, maintaining technical support near the 2090 price level. Five sectors ended in the red with utilities (-1.8%), telecom services (-1.6%), and energy (-1.1%) rounding out the leaderboard. On the flipside, consumer discretionary (+0.4%), industrials (+0.3%), and technology (+0.3%) led the pack.
The PHLX Semiconductor Index (+1.2%) demonstrated relative strength, trimming its weekly loss to 0.5%. Micron (MU 12.20, +0.47) outperformed in the index gaining 4.0%. Elsewhere, NVIDIA (NVDA 48.89, +1.24) jumped 2.6% after announcing the launch of a new video card on July 19. In the broader technology sector (+0.1%), Western Digital (WDC 47.66, +2.20) climbed 4.8% after raising its quarterly earnings and revenue guidance above consensus.
The Dow Jones Transportation Average (+0.5%) finished ahead of the broader market as airlines trimmed their losses. In the group, Delta Air Lines (DAL 36.37, +0.79) and American Airlines (AAL 29.40, +1.05) gained 2.2% and 3.7%, respectively. In the industrial sector (+0.3%), Dow component General Electric (GE 31.82, +0.08) outperformed, extending its monthly gain to 1.1%. The broader industrial sector has ticked lower by 0.2% in July.
The health care space (-0.2%) ended its day lower as health care plan names underperformed. On that note, Aetna (AET 115.47, -4.77) and Humana (HUM 162.74, -17.24) lost a respective 4.0% and 9.6%. The two prospective merger partners fell amid reports that they will meet with the Department of Justice tomorrow regarding their pending deal. On the flipside, biotechnology outperformed, evidenced by the 0.6% gain in the iShares Nasdaq Biotechnology ETF (IBB 267.84, +1.60).
In the consumer staples group (-0.1%), PepsiCo (PEP 107.49, +1.57) climbed 1.5% after reporting above-consensus bottom-line results for the quarter. The company also raised its earnings guidance for the fiscal year. Elsewhere, WhiteWave Foods (WWAV 56.23, +8.80) surged 18.6% after announcing that Danone (DANOY 14.30, +0.15) would acquire the company for $56.25 per share.
The U.S. Dollar Index (96.27, +0.22) ended off its session high as the pound, euro, and commodity currencies lost ground to the greenback. Cable fell 0.2% (1.2909) while the single currency lost 0.3% against the buck (1.1064). The dollar/Canadian dollar ended higher by 0.3% (1.2997) amid weakness in oil. Separately, the dollar lost 0.5% against the safe-haven yen (100.74).
The Treasury complex ended modestly lower as the yield on the 10-yr note rose two basis points to 1.39%.
Today's participation was above the recent average as more than 851 million shares changed hands on the NYSE floor.
Today's economic data included June Challenger Job Cuts, ADP Employment Change Report for June, and weekly initial claims:
- June Challenger Job Cuts reported in at 38,500, which compares to the prior month's reading of 30,200.
- The ADP Employment Change report for June pointed to the addition of 172,000 jobs
- The more influential Employment Situation Report (consensus 175K) will be released tomorrow at 8:30 ET.
- Weekly initial claims for the week ending July 2 totaled 254,000 while the consensus expected a reading of 268,000.
- With today's report, the series has been running below 300,000 for 70 consecutive weeks.
- This is the longest sub-300,000 streak since 1973.
- The latest initial claims reading lowered the four-week moving average for claims to 264,750.
- Continuing claims for the week ending June 25 declined by 44,000 to 2.124 million.
- The four-week moving average for this series increased by 3,000 to 2.148 million.
Friday's economic data will include the Employment Situation Report for June (consensus 175,000) and Consumer Credit for May (consensus $15.3 billion), which will be released at 8:30 ET and 15:00 ET, respectively.
- Dow Jones +2.7% YTD
- S&P 500 +2.6% YTD
- Russell 2000 +1.2% YTD
- Nasdaq Composite -2.6% YTD