Closing Stock Market Summary
The major indices closed on a downbeat note after trading flattish in the early going. Initially, the S&P 500 was holding steady with 4,400 acting as a level of support. By the afternoon, though, a retreat effort had taken root, leading the major indices to close near their lows of the day and below 4,400.
The afternoon selling was orderly and looked consistent with the consolidation mindset that has driven the price action so far this month. Another jump in market rates gave participants an excuse to take more money off the table. The 10-yr note yield rose five basis points today to 4.31%, settling at its highest level since November 2007.
The 10-yr note yield is now up 35 basis points for the month with participants keying on supply matters and incoming data that continue to validate the soft landing/no landing scenario that presumably will keep inflation above the Fed's 2.0% goal and the Fed itself in a higher-for-longer mindset that includes a consideration of raising rates yet again.
This morning's weekly jobless claims data was indicative of a tight labor market, which also contributed to the move in the 10-yr note. Claims dropped to 239,000 from 250,000 last week.
Mega caps were relative underperformers, pressured by the jump in rates, but many stocks came along for the downside moves. Decliners led advancers by a 5-to-2 margin at the NYSE and a 2-to-1 margin at the Nasdaq. The Vanguard Mega Cap Growth ETF (MGK) fell 1.1% and the Invesco S&P Equal Weight ETF (RSP) fell 0.8%.
Dow component Cisco (CSCO 54.73, +1.77, +3.3%) was a winning standout after its earnings report while fellow Dow component Walmart (WMT 155.69, -3.57, -2.2%) logged a decline after its earnings report.
Only one of the S&P 500 sectors registered a gain -- energy (+1.1%) -- while the consumer discretionary (-1.6%) and consumer staples (-1.0%) sectors saw the biggest declines.
- Nasdaq Composite: +27.2% YTD
- S&P 500: +13.8% YTD
- S&P Midcap 400: +5.8% YTD
- Russell 2000: +5.0% YTD
- Dow Jones Industrial Average: +4.0% YTD
Reviewing today's economic data:
- Weekly Initial Claims 239K (consensus 240K); Prior was revised to 250K from 248K; Weekly Continuing Claims 1.716 mln; Prior 1.684 mln
- The key takeaway from the report is that initial jobless claims -- a leading indicator -- are pacing at levels that are indicative of a tight labor market, which is indicative of an economy that isn't pacing for a hard landing.
- August Philadelphia Fed Index 12.0 (consensus -9.0); Prior -13.5
- July Leading Indicators -0.4% ( consensus -0.4%); Prior -0.7%
Vipshop (VIPS), Deere (DE), Estee Lauder (EL), and Buckle (BKE) report earnings ahead of tomorrow's open.
There is no U.S. economic data of note on Friday.