Closing Market Summary: Indices End Flat Ahead of Employment ReportThe stock market ended the Thursday affair on a flat note as investors looked ahead to tomorrow's release of the April Employment Situation Report (consensus 207k). Other contributing factors for today's trade included an uptick in oil, a bid in the Treasury complex, a leg higher in the dollar, and the underperformance of the heavily-weighted consumer discretionary sector (-0.6%). The Nasdaq Composite (-0.2%) ended its day behind the S&P 500 (UNCH) and the Dow Jones Industrial Average (+0.1%).
Overnight, international bourses adopted a risk-off posture ahead of tomorrow's release of the Employment Situation Report for April. The consensus expects nonfarm payrolls to increase by 207,000 and the consensus expects hourly earnings to increase 0.3%. The influential jobs report follows yesterday's ADP Employment Change for April (156,000; consensus 196,000), which likely lowered expectations for the employment reading.
The U.S. market opened on a higher note as a rebound in crude helped increase risk appetite in the broader market. WTI crude traded as high as $45.98/bbl as investors weighed the impact of a wildfire in the Canadian oil sands town of Fort McMurray. The area produces approximately 17.0% of Canada's oil output and evacuation efforts impacted short-term production from the area. WTI crude ended its day off its high as an uptick in the U.S. Dollar Index (93.76, +0.58) acted as a headwind for the dollar-denominated commodity.
The major averages pared gains along with oil as risk appetite declined ahead of tomorrow's data. By the end of the day, six sectors ended beneath their flat lines as consumer discretionary (-0.6%), telecom services (-0.6%), materials (-0.5%), and utilities (-0.4%) rounded out the leaderboard. On the flipside, energy (+0.7%) and health care (+0.5%) finished with the largest gains.
In the consumer discretionary space (-0.6%), Amazon (AMZN 659.09, -11.81) lost 1.8%, trimming its post-earnings gain to 9.5%. Elsewhere, Dow component Nike (NKE 58.19, -0.92) slipped 1.6% as it traded lower in sympathy with retail names. The SPDR S&P Retail ETF (XRT 42.91, -0.90) fell 2.1% after April same store sales readings disappointed.
The Dow Jones Transportation Average (-1.1%) displayed relative weakness as FedEx (FDX 160.37, -4.88) trimmed its year-to-date gain to 7.6%. Matson (MATX 32.82, -4.71) plunged 12.6% and rounded out the index after missing earnings estimates for the first quarter. Elsewhere, airlines name continued their recent retreat as American Airlines (AAL 32.80, -0.40) extended its weekly loss to 5.5%. The Transportation Average has declined 2.6% so far this week.
Independent oil and gas companies outperformed in the commodity-sensitive energy space (+0.7%). Apache (APA 54.82, +4.09) gained 8.1% after beating bottom-line estimates for the quarter and raising its North American onshore production guidance. EOG Resources (EOG 81.26, +1.92) gained 2.4% ahead of this evening's earnings report. WTI crude ended its day higher by 1.3% at $44.34/bbl. The broader energy sector has declined 2.8% this week, compared to a loss of 3.5% in oil over that period.
The Treasury complex rallied as equities remained near their session lows. The yield on the 10-yr note sank from 1.80% (+3 bps) at the beginning of the session to 1.74% (-4 bps) by the close. The yield on the 10-yr note has fallen nine basis points since last Friday's settlement at 1.83%.
Today's volume was above the recent average as more than 949 million shares changed hands on the NYSE floor.
Today's economic data included April Challenger Job Cuts and weekly initial claims:
- The Challenger Job Cuts report revealed 250,061 job cut announcements from January to April, marking the highest total for that period since 2009.
- Initial claims filings for the week ending April 30 were 274,000 (consensus 259,000), an increase of 17,000 from the prior week's unrevised level.
- Notwithstanding the jump in initial claims, they remained below 300,000 for the 61st straight week, extending their best streak since 1973. The four-week moving average for initial claims bumped up 2,000 to 258,000.
- Continuing claims for the week ending April 23 decreased by 8,000 to 2.121 million.
- That is the lowest level since November 4, 2000, and the four-week moving average of 2.140 million is the lowest level since November 11, 2000.
Tomorrow's economic data will include the Employment Situation Report for April (consensus 207k) and Consumer Credit for March (consensus $18.0 billion), which will cross the wires at 8:30 ET and 15:00 ET, respectively.
- Nasdaq Composite -5.8% YTD
- Russell 2000 -2.4% YTD
- S&P 500 +0.3% YTD
- Dow Jones +1.4% YTD