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Stock market today: Wall Street drifts following mixed reports on US job market, Big Tech earnings | FOX 5 San Diego
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Is The Sky Falling For The S&P 500 Index?
- The S&P 500 extended its long-term uptrend to a high of 4,607.07 during July before closing the month at 4,588.96.
- The same index came under pressure early this month, dropping almost 1.5% on Wednesday, August 2.
- While the break created plenty of Chicken Little-like squawking from the industry, the reality is the move looks to be seasonal.
It was inevitable, I suppose, given the S&P 500 ($INX) finished July within sight of its monthly high. After all, US boxed beef markets showed the US labor market cooled a bit last month, all while the Federal Open Market Committee had followed through on its expected 25 basis-point rate hike with another one expected in September.
- Additionally, it was reported funds had moved to their largest short position in US Treasuries in years by late July. Given all this, again, it was inevitable the S&P would take a breather. As July came to an end the index sat at 4,588.96, its highest monthly close since December 2021 at 4,766.18.
- Recall it was the next month, January 2022, when the $INX completed a bearish key reversal[i] turning the long-term trend down.
- This trend last until this past October when the same index completed a bullish spike reversal[ii]turning the long-term trend up again.
- This was enough to spark the canned squawking of Chicken Littles across the industry that the sky was falling. After all, it was the first time in 47 days (if I recall) the S&P 500 had lost more than 1% with its 1.4% daily loss. “The end is nigh!”, was basically the theme of the day as the sun set on Hump Day.
- What we are seeing is nothing more than a normal seasonal downturn by the S&P 500. Nothing more. Certainly nothing to get worked into a frenzy over.
Recall that my seasonal indexes are themselves averages, so weekly high and low closes tend to occur around the average. Given this, what looks to be the high weekly close in 2023 (green line) the last week Friday of July (4,582.23) fits the seasonal tendency. If we use that price as the starting point for the expected selloff the target area is between 4,536 (1%, 30-year index) and 4,353 (5%, 5-year index), with a 2.75% drop coming in at 4,456. Again, those would all be expected low weekly closes.
What happens once we get through September? The various timeframes show us the S&P 500 tends to gain anywhere from 6% (5-year index) to 4% (30-year index).
- So rather than everyone running around like a Chicken Little with its head cut off, the more logical approach might be to look at this as a seasonal bullish opportunity.
[ii] A bullish spike reversal is when a market moves to a new low before rallying to close higher for the timeframe.
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Stocks turn lower, S&P 500 heads for fourth straight day of losses
Provided by Dow Jones
By Christine Idzelis and Joseph Adinolfi
Amazon shares surge Friday
U.S. stocks give up gains Friday afternoon, with the S&P 500 on track for a fourth straight day of losses, as investors parsed the July jobs report from the Department of Labor along with Big Tech earnings from Amazon and Apple.
What's driving markets
For the week, the Dow was on track to fall 1%, while the S&P 500 was on pace to decline 2.1% and the Nasdaq was heading for a 2.7% drop, according to FactSet data, at last check.
What's driving markets
Stocks turned lower Friday afternoon, giving up earlier gains after the latest labor-market report showed the U.S. economy continued to create jobs in July while average hourly earnings rose.
The U.S. economy added 187,000 jobs last month, with the unemployment rate falling to 3.5% from 3.6% in June, according to a report Friday from the Bureau of Labor Statistics. The report also showed average hourly earnings rose 0.4% in July, up 4.4% over the past 12 months.
Last month's wage growth was slightly higher than expected, while the number of jobs created was a bit softer than the 200,000 anticipated by Wall Street analysts.
The jobs report was "pretty benign," being neither too hot nor too cold, said Randy Frederick, Charles Schwab's managing director of trading and derivatives, in a phone interview Friday. "Recession seems highly unlikely in 2023," while traders, after digesting the employment data, still expect the Federal Reserve to hold interest rates steady at its meeting next month, he said.
Slowing job growth may bolster hopes that the Fed's rate hikes could succeed in cooling the economy -- and inflation with it -- without leading to a hard landing.
However, many economists and analysts flagged the slightly hotter-than-expected wage growth in July as a potential sticking point for the Fed. The annualized 4.4% rise is well above the Fed's target of 2% inflation, said Bankrate senior economic analyst Mark Hamrick, in emailed commentary Friday.
Adam Farstrup, head of the multi-asset team for the Americas at Schroders, said by phone Friday that his base case is for a "soft landing" for the U.S. economy, but he's monitoring wage growth and a recent rise in oil prices as possible sources for a potential second round of inflation.
Read:Oil on track for 6th straight weekly rise after supply cuts
Investors will get a reading on July inflation next week, with monthly data from the consumer-price index due out on Aug. 10.
Meanwhile, Treasury yields declined after the jobs report, helping to ease pressure on stocks. The yield on the 10-year Treasury note BX:TMUBMUSD10Y was down about 13 basis points on Friday at around 4.06%, FactSet data show, last last check.
Investors also continued to digest quarterly earnings results, including reports from Big Tech companies Apple Inc. (AAPL) and Amazon.com (AMZN) after the market's close on Thursday. Amazon was the best-performing stock in the S&P 500 on Friday afternoon, up more than 9%, while shares of Apple fell, according to FactSet data.
"Apple is probably getting beaten up because its guidance was not spectacular," said Charles Schwab's Frederick. Overall, earnings season for the second quarter "started off really good and it's not so great now."
With the vast majority of companies now having reported their results, overall earnings growth has recently fallen below expectations for the period, dropping more than anticipated year over year, he said. Analysts are expecting the second quarter to be this year's quarterly earnings trough, according to Frederick.
The S&P 500 is up almost 17% so far this year, according to FactSet data, at last check.
"To see further upside in the equity market, we do think you would have to see much greater optimism about the path of earnings" in the third and four quarters, said Schroders's Farstrup. As for buying opportunities, "the cyclical areas are really what we are most interested in," he said, pointing to financials and industrials as examples.
Companies in focus
Steve Goldstein contributed to this article.
-Christine Idzelis
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
Amazon shares surge Friday
U.S. stocks give up gains Friday afternoon, with the S&P 500 on track for a fourth straight day of losses, as investors parsed the July jobs report from the Department of Labor along with Big Tech earnings from Amazon and Apple.
What's driving markets
For the week, the Dow was on track to fall 1%, while the S&P 500 was on pace to decline 2.1% and the Nasdaq was heading for a 2.7% drop, according to FactSet data, at last check.
What's driving markets
Stocks turned lower Friday afternoon, giving up earlier gains after the latest labor-market report showed the U.S. economy continued to create jobs in July while average hourly earnings rose.
The U.S. economy added 187,000 jobs last month, with the unemployment rate falling to 3.5% from 3.6% in June, according to a report Friday from the Bureau of Labor Statistics. The report also showed average hourly earnings rose 0.4% in July, up 4.4% over the past 12 months.
Last month's wage growth was slightly higher than expected, while the number of jobs created was a bit softer than the 200,000 anticipated by Wall Street analysts.
The jobs report was "pretty benign," being neither too hot nor too cold, said Randy Frederick, Charles Schwab's managing director of trading and derivatives, in a phone interview Friday. "Recession seems highly unlikely in 2023," while traders, after digesting the employment data, still expect the Federal Reserve to hold interest rates steady at its meeting next month, he said.
Slowing job growth may bolster hopes that the Fed's rate hikes could succeed in cooling the economy -- and inflation with it -- without leading to a hard landing.
However, many economists and analysts flagged the slightly hotter-than-expected wage growth in July as a potential sticking point for the Fed. The annualized 4.4% rise is well above the Fed's target of 2% inflation, said Bankrate senior economic analyst Mark Hamrick, in emailed commentary Friday.
Adam Farstrup, head of the multi-asset team for the Americas at Schroders, said by phone Friday that his base case is for a "soft landing" for the U.S. economy, but he's monitoring wage growth and a recent rise in oil prices as possible sources for a potential second round of inflation.
Read:Oil on track for 6th straight weekly rise after supply cuts
Investors will get a reading on July inflation next week, with monthly data from the consumer-price index due out on Aug. 10.
Meanwhile, Treasury yields declined after the jobs report, helping to ease pressure on stocks. The yield on the 10-year Treasury note BX:TMUBMUSD10Y was down about 13 basis points on Friday at around 4.06%, FactSet data show, last last check.
Investors also continued to digest quarterly earnings results, including reports from Big Tech companies Apple Inc. (AAPL) and Amazon.com (AMZN) after the market's close on Thursday. Amazon was the best-performing stock in the S&P 500 on Friday afternoon, up more than 9%, while shares of Apple fell, according to FactSet data.
"Apple is probably getting beaten up because its guidance was not spectacular," said Charles Schwab's Frederick. Overall, earnings season for the second quarter "started off really good and it's not so great now."
With the vast majority of companies now having reported their results, overall earnings growth has recently fallen below expectations for the period, dropping more than anticipated year over year, he said. Analysts are expecting the second quarter to be this year's quarterly earnings trough, according to Frederick.
The S&P 500 is up almost 17% so far this year, according to FactSet data, at last check.
"To see further upside in the equity market, we do think you would have to see much greater optimism about the path of earnings" in the third and four quarters, said Schroders's Farstrup. As for buying opportunities, "the cyclical areas are really what we are most interested in," he said, pointing to financials and industrials as examples.
Companies in focus
Steve Goldstein contributed to this article.
-Christine Idzelis
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
___________________________________________________________________________________
BNN Bloomberg · 12 hours ago
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