Closing Stock Market SummaryThe stock market built on its recent losses during the last trading day of August. The major indices opened somewhat higher before spending most of the morning oscillating around the flat line. Downside momentum picked up in the afternoon with the main indices closing near session lows.
Ahead of the open, market participants digested new hawkish comments from Cleveland Fed President Mester (FOMC voter). She said that she thinks the fed funds rate will be somewhat above 4.00% by early next year and that she does not anticipate a rate cut in 2023. She added, "This will be painful in the near term but so is high inflation."
The market was mixed in the early going, but closed with many stocks down on the day. At midday, decliners led advancers by an 11-to-10 margin at the NYSE and a barely greater than 1-to-1 margin at the Nasdaq. At the close, decliners led advancers by a greater than 2-to-1 margin at the NYSE and a 3-to-2 margin at the Nasdaq.
The Vanguard Mega Cap Growth ETF (MGK) and the Invesco S&P 500 Equal Weight ETF (RSP) both closed down 0.7% while the S&P 500 logged a 0.8% loss.
Ten of the 11 S&P 500 sectors closed in the red while communication services was flat. Meta Platforms (META 162.93, +5.77, +3.7%) boosted sector performance, partly fueled by Snap's (SNAP 10.88, +0.87, +8.7%) better than expected revenue guidance while also benefiting from some month-end buying interest in a beaten-up mega-cap stock.
The information technology sector closed near the bottom of the pack after heavy selling in HP Inc (HPQ 28.71, -2.39, -7.7%) and Seagate Technology (STX 66.96, -2.46, -3.5%). The former issued disappointing EPS guidance with its earnings report while the latter lowered prior Q1 EPS guidance.
Only two S&P 500 sector managed to hold onto gains for the month, utilities with a 0.1% gain and energy with a 2.2% gain.
Separately, energy complex futures settled mixed. WTI crude oil futures fell 2.4% to $89.41/bbl while natural gas futures rose 0.9% to $9.14/mmbtu.
The Treasury market was mixed with the 2-yr note yield falling two basis points to 3.44% while the 10-yr note yield rose two basis points to 3.13%. Treasury yields rose sharply on the month with the 2-yr note yield climbing 54 basis points while the 10-yr note yield rose 49 basis points.
Market participants will receive the following economic data Thursday:
- 8:30 ET: Weekly Initial Claims (consensus 250,000; prior 243,000), Continuing Claims (prior 1.415 mln), revised Q2 Productivity (consensus -4.6%; prior -4.6%), and revised Q2 Unit Labor Costs (Briefing.com consensus 10.7%; prior 10.8%)
- 9:45 ET: Final August IHS Markit Manufacturing PMI (prior 51.3)
- 10:00 ET: July Construction Spending (consensus -0.1%; prior -1.1%) and August ISM Manufacturing Index (consensus 52.0%; prior 52.8%)
- 10:30 ET: Weekly natural gas inventories (prior +60 bcf)
Ahead of Thursday's open, Hormel Foods (HRL), Campbell Soup (CPB), Signet Jewelers (SIG), and Ollie's Bargain Outlet (OLLI) are all set to report earnings.
Reviewing today's economic data:
- Weekly MBA Mortgage Applications Index showed a 3.7% decline following the prior week's 1.2% decrease
- August ADP Employment Change Report showed an estimated 132,000 employees were added to private sector payrolls versus 270,000 in July based on ADP's revised methodology
- August Chicago PMI reading was 52.2 (consensus 53.1) after the prior reading of 52.1.
- Weekly EIA Crude Oil Inventories showed a draw of 3.33 million barrels after last week's draw of 3.28 million
Dow Jones Industrial Average: -13.9% YTD
S&P 400: -14.5% YTD
S&P 500: -17.0% YTD
Russell 2000: -17.9% YTD
Nasdaq Composite: -24.5% YTD