>>> US Close Dow +0,08% S&P -0,37% Nasdaq -0,91% Russell -0,76%

Closing Market Summary: S&P Falls Again As Tech Shares Weigh For Second Day In A Row

The S&P 500 fell for the fourth time in five sessions on Thursday, with the typically high-flying technology sector underperforming for the second day in a row. The S&P 500 finished lower by 0.4%, while the tech-heavy Nasdaq tumbled 0.9%. The blue-chip Dow outperformed, however, tacking on 0.1%.

Thursday's session began on a flat note, but technology shares soon began selling off, pulling the S&P 500 into negative territory. At its worst mark of the day, the S&P 500 was down 0.7%. Tech giants like Facebook (FB 162.53, -4.65), Apple (AAPL 223.10, -3.77), and Alphabet (GOOG 1171.44, -15.04) lost between 1.3% and 2.8%, and their FAANG peer Amazon (AMZN 1958.31, -36.51) dropped 1.8%.

Chipmakers were also a drag on the tech space, which finished lower by 0.8%, with Micron (MU 44.65, -4.89) pacing the retreat after announcing that NAND pricing declined in the third quarter, triggering concerns about end demand/excess supply that go hand-in-hand with remarks about pricing declines. MU shares lost 9.9%.

Meanwhile, the energy sector (-1.9%) was the worst-performing group, weighed down by a drop in the price of crude oil. WTI crude futures settled lower by 1.4% at $67.81/bbl, with nearly all of that loss coming after the release of the EIA's weekly inventory report, which showed a 4.3 million barrel drop in crude stockpiles, but a 1.8 million barrel jump in inventories of gasoline.

The heavily-weighted financial sector (-0.6%) also declined, as did the consumer discretionary space (-0.3%), but six of the seven remaining sectors finished in the green. The lightly-weighted telecom services sector (+0.7%) finished atop the day's leaderboard, and the industrial space (+0.3%) was another notable outperformer.

In Washington, U.S. and Canadian officials continued to negotiate on trade, and the world awaited news from the White House, which could impose another round of tariffs on Chinese goods as soon as a public comment period ends at midnight. This round of duties will target $200 billion worth of goods, including furniture, tires, bicycles, and lighting products. Beijing has vowed to retaliate.

Elsewhere, U.S. Treasuries rallied on Thursday, sending the benchmark 10-yr yield two basis points lower to 2.88%; the U.S. Dollar Index slipped 0.1% to 94.98; and the CBOE Volatility Index, which is often referred to as the "investor fear gauge" jumped 4.2% to 14.49, touching its highest level in three weeks.

Reviewing Thursday's big batch of economic data, which included the August ADP Employment Change report, the revised readings for Q2 Productivity and Unit Labor Costs, the weekly Initial Claims report, July Factory Orders, and the August ISM Services Index:

  • The ADP National Employment Report showed an increase of 163,000 in August (consensus 186,000), and the July reading was revised to 217,000 (from 219,000).
    • The ADP reading is seen as a prelude to the BLS's nonfarm payrolls figure (consensus 187,000), which will be released on Friday.
  • Second quarter unit labor costs were revised to -1.0% (consensus -0.9%) from -0.9% in the preliminary reading, and Q2 productivity was left unrevised at +2.9%, as expected.
    • The key takeaway from the revised report is the same as the advance estimate: labor costs look to be in check, which will facilitate a gradual tightening path for the Federal Reserve.
  • The latest weekly initial jobless claims count totaled 203,000, while the Briefing.com consensus expected a reading of 214,000. Today's tally was below the unrevised prior week count of 213,000. As for continuing claims, they declined to 1.707 million from a revised count of 1.710 million (from 1.708 million).
    • The key takeaway from the report is that it is consistent with a tight labor market, as employers appear reluctant to cut payrolls.
  • The Factory Orders report for July showed a decrease of 0.8% (Briefing.com consensus -0.6%), and the June reading was revised to +0.6% from +0.7%.
    • The key takeaway from the report is that a decline in shipments of nondefense capital goods excluding aircraft will weigh on Q3 GDP estimates, but today's reading was consistent with the Advance Durable Orders report for July, meaning the decline should have been expected.
  • The ISM Services Index for August ticked up to 58.5 (consensus 56.5) from an unrevised reading of 55.7 in July.
    • The key takeaway from the report is that a solid rebound from a July pullback indicates continued health in the non-manufacturing sector.

Looking ahead, investors will receive the Employment Situation report for August on Friday, with the Briefing.com consensus expecting an increase of 187,000 in nonfarm payrolls, an increase of 0.2% in average hourly earnings, and an unemployment rate of 3.9%, unchanged from July.

  • Nasdaq Composite +14.8% YTD
  • Russell 2000 +11.7% YTD
  • S&P 500 +7.7% YTD
  • Dow Jones Industrial Average +5.2% YTD

>>> Russian rouble slides on Medvedev rate comments

Russian rouble slides on Medvedev rate comments
Currency on track for weakest close since 2016


Russia’s rouble joined the ranks of emerging market currencies to descend to multiyear lows, with the currency on track to notch its weakest close since 2016.

The currency fell 1.6 per cent to RUB69.29 after prime minister Dmitry Medvedev called on the central bank to cut interest rates.

Russia is attempting to meet president Vladimir Putin’s ambitious growth and spending targets despite turmoil from global jitters on emerging markets and the possibility of new US sanctions.

Speaking at a finance ministry conference, Mr Medvedev said: “We need to move from neutral credit regulation to stimulating [growth]. Even despite all the success we’ve had in limiting inflation, rates are still quite high and in that sense we are counting on the Bank of Russia’s active position on that issue.”

The comments stand in contrast to the position of central bank governor Elvira Nabiullina, who toughened her rhetoric on rates earlier this week.

“There aren’t many factors in favour of cutting rates. There are a significant number of factors in favour of keeping them [at 7.25 per cent] and a few new factors have appeared that let us put the question of raising rates on the table,” she said.

Ms Nabiullina, whom Mr Putin has given broad autonomy after she stabilised the rouble following a 2014 crisis and cut inflation to 4 per cent, will announce the central bank’s rates decision next Friday.

The rouble’s fresh slide comes amid market expectations that Russia is at risk of another round of sanctions, following UK prime minister Theresa May’s announcement on Wednesday that two Russian intelligence officers were responsible for the Salisbury novichok attacks.

Rabobank analyst Piotr Matys said sentiments are also not being helped by growing concerns over the independence of Russia’s central bank

“While [central bank] Governor [Elvira] Nabiullina is well respected for acting decisively during the rouble crisis only a few years, Medvedev’s remarks may undermine the credibility of the central bank,” he said.

EM currencies are in the markets’ spotlight, with investors concerned that the sell-offs that afflicted the Argentine peso and the Turkish lira earlier this year were now spreading to others.

This week alone, the Indian rupee and the Indonesia rupiah dived to record lows, while the South African rand dropped to its lowest since June 2016. Other EM currencies under pressure include the Polish zloty and the Mexican peso, while several EM equity indices have suffered.

The rouble lost nearly 8 per cent of its value in two days in early April following the US announcement it was imposing sanctions on individuals and companies over alleged Russian interference in the 2016 US presidential election.

In a note before the latest rouble decline, Commerzbank analyst Tatha Ghose warned investors to “brace for greater rouble volatility” following Mrs May’s Salisbury statement.

“The findings have the potential to trigger additional sanctions because the US has anyway imposed a first round of sanctions for this act, and warned that the second round would be far more draconian,” he wrote.

>>> FCC releases agenda for September 26 meeting

FCC releases agenda for September 26 meeting
  • Clarifying Local Franchising Authorities Regulation of Cable Operators
    • The Commission will consider a Second Further Notice of Proposed Rulemaking addressing two issues raised by a remand from the U.S. Court of Appeals for the Sixth Circuit concerning how local franchising authorities may regulate incumbent cable operators and cable television services.
  • Wireless Infrastructure Order
    • The Commission will consider a Declaratory Ruling and Report and Order that will clarify the scope and meaning of Sections 253 and 332(c)(7) of the Communications Act, establish shot clocks for state and local approvals for the deployment of small wireless facilities, and provide guidance on streamlining state and local requirements on wireless infrastructure deployment.