After The Close - The U.S. equity markets started off the final day of the week on the upside and, for the most part, remained in positive territory throughout the session.
Traders and investors digested a mixed bag of economic news today, with the spotlight on the latest jobs report. The Labor Department’s data showed 156,000 nonfarm payroll jobs were added in August, though this fell short of expectations. Notably, the manufacturing sector added 36,000 jobs, which equaled a five year high. Meanwhile, the unemployment rate ticked up to 4.4%, from 4.3%, while average hourly wages inched higher by a less-than-expected 0.1%.
Elsewhere, the Institute for Supply Management reported that the rate of U.S. manufacturing activity increased in August, marking a 12th-straight month of expansion and the highest reading since the spring of 2011. Specifically, the ISM Index rose to 58.8%, versus July’s reading of 56.3%. Meanwhile, U.S. auto sales for the month of August slipped 1.9% year over year. On the plus side, light trucks, accounting for 63% of the total, were up by 2.4%. By contrast, and reflecting an overarching trend in recent years, passenger vehicles were down 8.5%. Lastly, the University of Michigan reported that its consumer-sentiment index came in at 96.8 last month, up from 93.4 in July.
As we approached the closing bell in New York, all three of the major indexes were on the positive side of the ledger. By the numbers, the Dow Jones Industrials were up 58 points, while the broader S&P 500 Index was ahead by six, and the tech-heavy NASDAQ had advanced eight points. The sector breakdown was predominantly positive, led by basic materials and energy issues, which were collectively up around one percent.
Telecommunications and utility stocks were the only two segments showing any red, but the losses there were very slim.
The European bourses also had an upbeat day, with Germany’s DAX and France’s CAC-40 each advancing about three quarters of a percentage point, while London’s FTSE managed a more modest gain. - Mario Ferro
At the time of this article's writing, the author did not have positions in any of the companies mentioned.
12:00 PM EDT - The U.S. stock market is making some progress today, as traders digest the latest batch of economic reports. At roughly noon inNew York, the Dow Jones Industrial Average is ahead 44 points; the broader S&P 500 Index is up five points; and the NASDAQ, which has been somewhat sluggish, is higher by just four points. Market breadth shows underlying support for equities today, with winners outpacing losers on the NYSE. From a sector perspective, the financial, energy, and basic materials issues are displaying leadership, while the healthcare and technology names remain somewhat weak.
Meanwhile, the nation’s employment situation was in the spotlight earlier today. Specifically, there were 156,000 non-payroll jobs added to the nation’s economy in the month of August. Analysts had been looking for a slightly higher figure. However, it should be noted that there were solid gains in manufacturing and construction employment, which was an encouraging development. Meanwhile, there was little increase in hourly wages, suggesting that inflation is not a problem at this point. Too, the headline unemployment rate edged up to 4.4%, further highlighting some softness during the period. While the report was not overly discouraging, some traders may feel that the Federal Reserve will be less inclined to push for further interest-rate hikes in the coming months. Elsewhere, there were a few other economic items released today. Specifically, the ISM Index rose to 58.8 in the month of August, which was a constructive reading, while construction spending eased a bit in July.
Finally, a few technology companies weighed in with financial results over the past 24 hours. Specifically, shares of Tech Data (TECD) are slumping today, in response to a weaker-than-anticipated set of numbers. In addition, shares of Ambarella (AMBA) are down sharply in response to a disappointing outlook. On a brighter note, Palo Alto Networks (PANW) stock is advancing, as investors were encouraged by the progress being made by that networking company.
Technically, stocks have firmed up over the past few sessions. The S&P 500 Index is now back above the 50-day moving average, located at the 2,450 mark. Today’s trading puts the Dow Jones Industrial Average just below the 22,000 level. - Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
Before The Bell - Following Wall Street's stronger close on Wednesday, particularly on the NASDAQ, stocks got out of the starting gate rather strongly again yesterday morning, and as we passed the half-hour mark of trading, the Dow Jones Industrial Average, a marginal winner the day before, had jumped to a better-than-90-point gain. Strength also was seen in the NASDAQ and among the smaller-cap indexes. The solid opening performance reflected an apparent desire by traders to end the eighth month of the year on a high note, as Wall Street awaited the critical employment report that was issued minutes earlier this morning (see below).
Meanwhile, in addition to the calendar and today's jobs release, Wall Street also was focused on reports issued before the market opened yesterday. Here, unemployment claims ticked up nominally in the latest week. The government also reported that personal income, which had flattened out in June, had risen by a solid 0.4% in July. That gain was in line with forecasts. Moreover, personal consumption expenditures advanced by a reasonably decent 0.3% in July, the best gain since April, when it also rose 0.3%. Finally, a report showed that pending home sales had fallen by 0.8% in June. Clearly, the issuances were mixed.
Then, after this strong start, the market eased off some, so that as we entered the second hour of trading, the Dow had shed most of its early gains. Then, there was corporate earnings to contend with, and here, food processor Campbell Soup (CPB) was in the news, as falling soup sales hurt revenues and earnings in its fiscal fourth quarter. That stock, already weak, fell some 5% more in early dealings. Even so, that processor's focus on cost cutting did help it record some growth in earnings in the latest period. Other food companies saw their stocks dip, as well.
The advance then continued into the late morning and through the middle hours of the afternoon, although some skittish movements probably evolved during these hours, as traders positioned themselves ahead of the aforementioned jobs issuance. Among individual issues, Dow component UnitedHealth (UNH –Free UnitedHealth Stock Report) rose strongly in a solidly performing health care group. Overall, the market continued to do well, with the mid-afternoon hours showing that all 10 of the leading equity sectors gaining on the day, led by health care and the basic materials. Energy, too, did well gaining from a more than $1.00-a-barrel rise in crude prices.
In fact, stocks strengthened as we moved more deeply into the session, with the Dow climbing steadily higher, to its best levels of the day as we closed in on the final hour of trading and investors clearly grew more confident about the economic outlook. In all, as we headed into the home stretch, the Dow was ahead by more than 80 points, while the NASDAQ's advance was closing in on 1%. Some last-minute selling, meantime, pared the Dow's gain to a still respectable 56 points, while the NASDAQ held onto a 60-point advance, or just under 1.0%. All in all, it was a stellar session.
Now, a data-filled session is under way, and in overseas action last night, we see that the equity markets in Asia were mostly higher, on better manufacturing data out of China, while in Europe, stocks are trending upward, as well. Also, oil, a big gainer yesterday, is down now, on concerns about flooded refineries in the hurricane affected areas around Texas; gold is up, moving a bit further past $1,300 an ounce; and Treasury yields, off a bit yesterday, are down a little more. As for our futures, following the issuance of the August employment data, which showed a non-farm payroll increase of 156,000, or well below expectations, they are pointing higher at this time. That would seem to presage a strong opening when trading resumes within the hour.
Meanwhile, in addition to the jobs figure for August, which was, as noted disappointing and well below the 180,000 forecast, we see that non-farm payrolls were revised downward from 231,000 to 210,000 for June and 209,000 to 189,000 for July. Also, the jobless rate ticked up from 4.3% to 4.4% last month. Finally, the labor-force participation rate held steady at 62.9%, while average hourly wages edged up just three cents last month--only one-third of the gain for August. The good response from traders on the news reflects rising expectations that the Federal Reserve will not raise interest rates this year. - Harvey S. Katz, CFA