Closing Market Summary: Stocks Tick Lower Ahead of Jackson Hole SymposiumThe stock market ended a choppy session on a modestly lower note as investors maintained a cautious posture ahead of tomorrow's speech from Federal Reserve Chair Janet Yellen. The Dow Jones Industrial Average (-0.2%) finished behind the S&P 500 (-0.1%) and the Nasdaq Composite (-0.1%).
The benchmark index traversed a narrow ten-point trading range as equity indices continued to languish below recently-established record highs. The Thursday affair was hallmarked by thin trading conditions, a hodgepodge of earning results, and deviating sector leadership from the heavily-weighted technology (+0.1%), financial (+0.3%), consumer discretionary (-0.4%), and health care (-0.8%) sectors.
Equities began the session on a lower note as global markets tilted to the downside. European bourses underperformed following a weaker-than-expected reading of Germany's IFO Business Climate survey for August. However, relatively light volume and the potential market-moving nature of Chair Yellen's Friday remarks also likely contributed to increased volatility in overseas markets.
The major U.S. indices stumbled at the start of the session as disappointing quarterly results and/or guidance from the likes of Dollar Tree (DLTR 85.50, -9.43), Dollar General (DG 75.61, -16.18), and Signet Jewelers (SIG 83.44, -12.06) weighed on investor sentiment. Early morning Fed speak may have also dampened risk appetite after a few officials talked up the potential of a rate hike in the near term.
The S&P 500 (-0.1%) briefly fell to the 2170/2171 price level before reversing back towards its flat line. However, the broader market was unable to maintain its footing near those levels and slipped back towards its low in the final hour. The benchmark index finished in the bottom of today's trading range, but five sectors still ended in the green. The telecom services (+0.4%) and materials (+0.5%) sectors settled in front of the pack while consumer staples (-0.4%), consumer discretionary (-0.4%) and health care (-0.8%) underperformed.
The countercyclical health care sector (-0.8%) ended its day at the bottom of the leaderboard as biotechnology underperformed. In the group, Mylan Labs (MYL 42.85, -0.30) finished lower by 0.7% as participants weighed fresh criticisms of the drug maker. Mylan surrendered a 4.5% gain as recently-announced initiatives to lower the cost of its EpiPen device were deemed insufficient. Separately, St. Jude Medical (STJ 77.82, -4.06) declined 5.0% after Muddy Waters Capital issued bearish commentary on the name and disclosed a short position in the stock. The firm cited potential cyber security vulnerabilities for its negative view on St. Jude.
Retail names underperformed in the consumer discretionary space (-0.3%) as disappointing results and guidance from Dollar Tree (DLTR 85.50, -9.43), Dollar General (DG 75.61, -16.18), and Signet Jewelers (SIG 83.44, -12.06) overshadowed positive reports from Tiffany & Co (TIF 73.28, +4.41) and Guess? (GES 18.20, +3.30). The broader SPDR S&P Retail ETF (XRT 45.36, -0.26) ended lower by 0.6%, extending its week-to-date loss to 1.3%.
In the technology space (+0.1%), the high-beta chipmakers outperformed, evidenced by the 0.4% gain in the PHLX Semiconductor Index. In the group, Micron (MU 16.20, +0.69) jumped 4.5% after Nomura increased its price target on the stock to $20 from $16. In the broader sector, Salesforce.com (CRM 80.16, +2.34) gained 3.0% amid takeover rumors. The broader sector gained 0.1%, extending is month-to-date advance to 1.8%.
Treasuries ended on a lower note as yields rose through the curve. The yield on the benchmark 10-yr note finished higher by one basis point (1.58%) while the yield on the 2-yr note finished at 0.79% (+2 bps).
Today's participation was below the recent average as fewer than 697 million shares changed hands at the NYSE floor.
Today's economic data included weekly initial claims and Durable Goods Orders for July:
- Initial jobless claims for the week ending August 20 slipped to 261,000 (consensus 265,000) from the prior week's unrevised reading of 262,000.
- Continuing claims for the week ending August 13 were 2.145 million, down 30,000 from the prior week's unrevised reading.
- Durable goods orders increased 4.4% in July (consensus +3.5%) on the back of a 10.5% increase in transportation equipment orders, which was fueled by an 89.9% increase in nondefense aircraft and parts orders.
- Orders for the manufacturing sector have picked up again after declining in both May and June.
- Excluding transportation, orders were up 1.5% (consensus +0.4%), paced by gains in nearly all categories.
Tomorrow's economic data will include the second estimate of Q2 GDP (consensus 1.1%) and July International Trade in Goods, which will each cross the wires at 8:30 ET. Separately, the final reading of the University of Michigan Consumer Sentiment Survey for August (consensus 90.6) will be released at 9:45 ET.
- Russell 2000 +9.0% YTD
- S&P 500 +6.3% YTD
- Dow Jones +5.9% YTD
- Nasdaq Composite +4.1% YTD