Closing Stock Market Summary
Stocks had a strong showing today after a quiet start to the week in terms of market-moving events. The major indices all closed near their best levels of the session with decent gains. The S&P 500, which closed above 4,500, and the Nasdaq Composite climbed past their 50-day moving averages.
Gains were fairly broad in nature. 28 of the 30 Dow components logged a gain and all 11 S&P 500 sectors were positive. The real estate sector (+1.7%) saw the biggest gain. Energy (+1.3%) was another top performer, climbing alongside oil prices ($90.26/bbl, +1.69, +1.9%). The health care (+0.3%) and information technology (+0.7%) sectors closed at the bottom of the lineup.
Today's positive bias was driven by a couple of factors. There was a speculative buzz in the air surrounding the Arm Holdings (ARM 63.59, +12.59, +24.7%) IPO, which opened for trading at $56.10. There was also some central bank news and economic data that comported with a more hopeful economic outlook.
Specifically:
- The ECB raised its three, key interest rates by another 25 basis points, but hinted that it might be done raising rates, thereby opening the door to claims that today's move was a "dovish hike."
- The PBOC said the required reserve ratio will be cut by 25 basis points, effective September 15, for all banks that don't currently have a 5% reserve ratio.
- August retail sales (+0.6%) were stronger than expected.
- The August PPI report produced an in-line core reading and some palatable year-over-year increases of 1.6% for total PPI and 2.2% for core-PPI, respectively.
- Initial jobless claims for the week ending September 9 were just 220,000, which is a level associated with a tight labor market that is supportive of continued consumer spending.
The relatively calm response to the data from Treasuries was another factor supporting stocks. The 2-yr note yield rose two basis points to 5.01% and the 10-yr note yield rose four basis points to 4.29%.
Separately, Delta Air Lines (DAL 39.33, -0.22, -0.6%) was the latest airline to warn for Q3 due in part to rising fuel costs and was a notable laggard on a day that saw most stocks trade higher. Advancers led decliners by a better than 3-to-1 margin at the NYSE and by a 2-to-1 margin at the Nasdaq.
- Nasdaq Composite: +33.1% YTD
- S&P 500: +17.3% YTD
- S&P Midcap 400: +6.8% YTD
- Russell 2000: +6.0% YTD
- Dow Jones Industrial Average: +5.3% YTD
Reviewing today's economic data:
- Weekly Initial Claims 220K (consensus 226K); Prior was revised to 217K from 216K; Weekly Continuing Claims 1.688 mln; Prior was revised to 1.684 mln from 1.679 mln
- The key takeaway from the report is the same: the low level of initial claims -- a leading indicator -- is reflective of a fairly tight labor market, which is the basis for why consumer spending continues to hold up in the face of inflation pressures and rising rates.
- August PPI 0.7% (consensus 0.4%); Prior 0.3%; August Core PPI 0.2% (consensus 0.2%); Prior was revised to 0.4% from 0.3%
- The key takeaway from the report is that 80% of the rise in final demand prices was attributed to a 2.0% jump in the index for final demand goods, which was driven by a 10.5% increase in prices fir final demand energy. That understanding softens the blow of the headline surprise for the index for final demand; however, until energy prices back down, concerns about rising inflation expectations and the Fed holding higher for longer will persist.
- August Retail Sales 0.6% (consensus 0.2%); Prior was revised to 0.5% from 0.7%; August Retail Sales ex-auto 0.6% (consensus 0.4%); Prior was revised to 0.7% from 1.0%
- The key takeaway from the report is that gasoline station sales (+5.2%) had a big impact on the overall increase in retail sales. Excluding gasoline stations, retail sales were up a more modest 0.2%, which is suggestive of a consumer that is softening but not breaking.
- July Business Inventories 0.0% (consensus 0.1%); Prior was revised to -0.1% from 0.0%
Friday's calendar features the following data:
- 8:30 ET: August Import Prices (prior 0.4%), Import Prices ex-oil (prior 0.0%), Export Prices (prior 0.7%), Export Prices ex-agriculture (prior 0.6%), and September Empire State Manufacturing survey (consensus -10.0; prior -19.0)
- 9:15 ET: August Industrial Production (consensus 0.2%; prior 1.0%) and Capacity Utilization (consensus 79.3%; prior 79.3%)
- 10:00 ET: Preliminary September University of Michigan Consumer Sentiment ( consensus 69.4; prior 69.5)