Closing Stock Market Summary
Stocks struggled amidst rising market rates again today. An early bounce attempt in both the stock and bond markets quickly faded as yields shot higher in response to the release of the August JOLTS - Job Openings data at 10:00 a.m. ET.
The Job Openings and Labor Turnover Survey showed a sharp increase in job openings compared to July (to 9.610 mln from 8.920 mln), which reflected ongoing strength in the tight labor market. The 2-yr note yield, which stood at 5.08% just before the data, settled four basis points higher than yesterday at 5.14%. The 10-yr note yield, which was at 4.70% before the data, settled at 4.80%, which is 12 basis points higher than yesterday.
The jump in rates fueled concerns about valuations and increased competition for stocks posed by higher-yielding, risk-free alternatives. Another point of concern for stock market participants is how quickly rates have moved up. The 10-yr note yield is up 71 basis points since the start of September and the 2-yr note yield is up 29 basis points over the same time frame, presumably pressured by factors other than pressing inflation concerns.
Worries about the budget deficit and attendant supply issues to fund the growing deficit in the face of softening demand have been touted as one of the main factors driving yields higher.
Broad based losses today were paced by growth stocks and mega caps. The Russell 3000 Growth Index fell 1.9% and the Vanguard Mega Cap Growth ETF (MGK) dropped 1.9% versus a 1.4% for the market-cap weighted S&P 500 and a 1.2% decline for the Invesco S&P 500 Equal Weight ETF (RSP). Decliners had a better than 5-to-1 lead over advancers at the NYSE and a better than 7-to-2 lead at the Nasdaq.
Ten of the 11 S&P 500 sectors registered declines. The utilities sector (+1.2%) was alone in the green after plunging nearly 5.0% yesterday while the consumer discretionary sector (-2.6%) sported the largest decline followed by real estate (-1.9%), information technology (-1.8%), and financials (-1.7%).
In other news, the U.S. Dollar Index hit 107.35 immediately after the JOLTS data, but pulled back from its best levels and settled at 106.99 amid speculation Japan's Ministry of Finance intervened to stem the yen's weakness. USD/JPY, at 150.16 earlier, was down 0.7% to 148.79.
Also, the market was digesting news throughout the day regarding a motion to dismiss Kevin McCarthy (R-CA) as Speaker of the House.
The CBOE Volatility Index jumped 13.5% to 20.02.
- Nasdaq Composite: +24.8% YTD
- S&P 500: +10.2% YTD
- S&P Midcap 400: -0.1% YTD
- Dow Jones Industrial Average: -0.4% YTD
- Russell 2000: -1.9% YTD
Wednesday's economic calendar features:
- 7:00 ET: Weekly MBA Mortgage Index (prior -1.3%)
- 8:15 ET: September ADP Employment Change ( consensus 150,000; prior 177,000)
- 9:45 ET: Final September S&P Global U.S. Services PMI (prior 50.5)
- 10:00 ET: August Factory Orders ( consensus 0.3%; prior -2.1%) and September ISM Non-Manufacturing Index (consensus 53.7%; prior 54.5%)
- 10:30 ET: Weekly crude oil inventories (prior -2.17 mln)