Closing Stock Market Summary
Stocks closed out this first day of September on a mixed note. The three main indices closed with only modest gains or losses while the Russell 2000 (+1.1%) outperformed. The S&P 500 maintained a position above 4,500 today, reaching 4,501 at its low.
A jump in market rates, a view from Cleveland Fed President Mester (2024 FOMC voter) that inflation remains too high, and a sharp increase in oil prices ($85.55/bbl, +1.92, +2.3%) acted as headwinds for the stock market.
Treasuries saw some improvement immediately after the release of the August Employment Situation Report, which showed a softening in nonfarm payrolls after accounting for revisions, a jump in the unemployment rate to 3.8% from 3.5%, and a moderation in average hourly earnings growth to 4.3% year-over-year from 4.4%. Separately, the ISM Manufacturing Index for August was stronger than expected at 47.6% (Briefing.com consensus 46.7%), but remained below 50.0%, which is the dividing line between expansion and contraction, for the tenth consecutive month.
The 2-yr note yield fell to 4.78% and the 10-yr note yield hit 4.05% after the jobs report before an increase in selling activity took yields higher. To be fair, yields had already dropped sharply this week in the wake of some other soft data, so today's weakness was partly driven by a sell-the-news response.
The 2-yr note yield rose two basis points today, and fell 17 basis points this week, to 4.88%. The 10-yr note yield rose eight basis points today, and fell seven this week, to 4.17%.
Mega caps and growth stocks were relatively soft, reacting to the bump in rates and cooling off from a stronger showing earlier in the week. The Vanguard Mega Cap Growth closed flat while the Invesco S&P 500 Equal Weight ETF (RSP) logged a 0.4% gain and the market-cap weighted S&P 500 rose 0.2%. The Russell 3000 Value Index rose 0.6% versus a 0.1% gain in the Russell 3000 Growth Index.
On the earnings front, Elastic (ESTC 74.27, +12.39, +20.0%), MongoDB (MDB 392.88, +11.58, +3.0%), lululemon athletica (LULU 404.19, +22.93, +6.0%), and Dell (DELL 68.19, +11.95, +21.3%) were winning standouts following some pleasing earnings results and/or outlooks. Broadcom (AVGO 872.52, -50.37, -5.5%), meanwhile, sold off after its earnings report.
Roughly half of the 11 S&P 500 sectors closed in the green. The energy sector (+2.1%) saw the largest gain, rising alongside oil prices, while the consumer staples sector (-0.8%) registered the biggest decline.
As a reminder, equity and bond markets will be closed on Monday for Labor Day.
- Nasdaq Composite: +34.1% YTD
- S&P 500: +17.6% YTD
- S&P Midcap 400: +9.9% YTD
- Russell 2000: +9.1% YTD
- Dow Jones Industrial Average: +5.1% YTD
Reviewing today's economic data:
- August Nonfarm Payrolls 187K vs Briefing.com consensus of 175K; July was revised to 157K from 187K
- August Nonfarm Private Payrolls 179K vs consensus of 160K; July was revised to 155K from 172K
- August Avg. Hourly Earnings 0.2% vs consensus of 0.3%; July was 0.4%
- August Unemployment Rate 3.8% vs consensus of 3.6%; July was 3.5%
- August Average Workweek 34.4 vs consensus of 34.3; July was 34.3
- Altogether the key takeaway from the report is that it was a Goldilocks report as it pertains to the market's thinking that the Fed won't be raising rates again.
- August S&P Global US Manufacturing PMI - Final 47.9 (July was 47.0).
- July Construction Spending 0.7% vs Briefing.com consensus of 0.6%; June was revised to 0.6% from 0.5% "
- The key takeaway from the report is that residential spending continues to be powered by new single family construction to meet demand that cannot be satisfied through the existing home market.
- August ISM Manufacturing Index 47.6% vs consensus of 46.7%; July was 46.4%"
- The key takeaway from the report is that manufacturing demand remains soft, yet conditions in the manufacturing sector, slow they may be, appear to be stabilizing.