Closing Stock Market Summary
The stock market logged its fourth consecutive winning session in another lightly traded affair. Upside moves, however, were more subdued compared to recent sessions. The S&P 500, which closed above the 4,500 level, and the Nasdaq Composite finished near their highs of the day thanks to support from the mega cap space.
An initial drop in market rates following this morning's weaker than expected economic data provided added support early on. Treasury yields climbed off their intraday lows, though, as the session progressed.
The ADP Employment Change Report for August showed an estimated 177,000 jobs were added to private-sector payrolls ( consensus 195,000) following an upwardly revised 371,000 (from 324,000) in July. The second estimate for Q2 GDP, meanwhile, was revised down to 2.1% consensus 2.4%) and the GDP Price Deflator was revised down to 2.0% ( consensus 2.2%) from 2.2%.
The 2-yr note yield, at 4.90% just before the GDP report, pulled back to 4.82% before settling the session at 4.88%. The 10-yr note yield, at 4.15% just before the data, fell to 4.09% before settling at 4.12%.
Relative strength from the mega cap space was the biggest driver of index gains. The Vanguard Mega Cap Growth ETF (MGK) rose 0.7% while the Invesco S&P 500 Equal Weight ETF (RSP) rose 0.3%. The market-cap weighted S&P 500 closed up 0.4%.
Nine of the 11 S&P 500 sectors logged a gain, led by information technology (+0.8%) and energy (+0.5%). The utilities (-0.4%) and health care (-0.03%) sectors, meanwhile, fell to the bottom of the pack.
There were some individual stocks making outsized today. Ambarella (AMBA 60.34, -15.44, -20.4%) plunged after reporting better than expected earnings, but issuing Q3 revenue guidance that was well below consensus. HP Inc. (HPQ 29.29, -2.08, -6.6%) was another notable loser after reporting EPS that was in line with expectations, but moderated its expectations for Q4 (Oct), largely driven by a continued aggressive pricing environment in PCs, sluggish demand in China, and enterprise demand softening.
Meanwhile, Hewlett Packard Enterprise (HPE 17.36, +0.52, +3.1%) garnered a positive reaction after beating earnings estimates.
- Nasdaq Composite: +33.9% YTD
- S&P 500: +17.6% YTD
- Russell 2000: +8.8% YTD
- S&P Midcap 400: +8.1% YTD
- Dow Jones Industrial Average: +5.3% YTD
Reviewing today's economic data:
- Weekly MBA Mortgage Applications 2.3%; Prior was -4.2%
- August ADP Employment Change 177K vs consensus of 195K; Prior was revised to 371K from 324K
- July Adv. Intl. Trade in Goods -$91.2 bln; Prior was revised to -$88.8 bln from -$87.8 bln
- July Adv. Retail Inventories 0.3%; Prior was revised to 0.5% from 0.7%
- July Adv. Wholesale Inventories -0.1%; Prior was revised to -0.7% from -0.3%
- Q2 GDP - Second Estimate 2.1% vs consensus of 2,4%; Prior was 2.4%
- Q2 GDP Deflator - Second Estimate 2.0% vs consensus of 2.2%; Prior was 2.2%
- The key takeaway from the report is that it fits the soft landing scenario; also, there were downward revisions to the inflation readings, which is something that will continue to drive the market's belief that the Fed can refrain from another rate hike.
- July Pending Home Sales 0.9% vs consensus of -1.3%; Prior was revised to 0.4% from 0.3%
Looking ahead to Thursday, market participants will receive the following economic data:
- 8:30 ET: Weekly Initial Claims ( consensus 235,000; prior 230,000), Continuing Claims (prior 1.702 mln), July Personal Income ( consensus 0.3%; prior 0.3%), Personal Spending ( consensus 0.7%; prior 0.5%), PCE Prices (consensus 0.2%; prior 0.2%), and Core PCE Prices ( consensus 0.2%; prior 0.2%)
- 9:45 ET: August Chicago PMI ( consensus 45.0; prior 42.8)
- 10:30 ET: Weekly natural gas inventories (prior +18 bcf)