On Thursday, US benchmark equity indexes experienced a decline as investors assessed the most recent corporate earnings reports and macroeconomic data, while also awaiting results from tech giants Apple and Amazon. The fluctuating market environment reflects ongoing uncertainties in the economic landscape, making it crucial for investors to closely monitor these developments. Recently, S&P Global reported that the US manufacturing purchasing managers' index (PMI) fell to 49.6 in July, down from 51.6 in June, marking the first time in seven months that it dropped below the neutral 50 level.
This decline suggests a contraction in the manufacturing sector, which could impact overall economic growth if the trend continues. Additionally, data on nonfarm productivity revealed a 2.3% increase in Q2 following a modest 0.4% gain in Q1. While output growth has outpaced that of previous quarters, the growth in hours worked has only marginally accelerated.
Moreover, unit labor costs have risen by 0.9% in Q2, reflecting a slowdown in compensation growth alongside the productivity surge. These figures indicate a complex relationship between productivity and labor costs that market participants must navigate. In the commodities market, West Texas Intermediate crude oil prices saw a $1.60 drop, closing at $76.31 per barrel, while October Brent crude, the global benchmark, fell $1.13 to $79.71.
The declines are largely attributed to concerns about waning demand in China, overshadowing fears about escalating tensions in the Middle East, particularly following the assassination of a Hamas leader in Tehran a day earlier. In corporate news, Meta Platforms demonstrated resilience in the face of market volatility, with shares rising by 4.8% after the company's Q2 earnings and sales surpassed Wall Street's expectations.
This performance highlights the potential for technology firms to drive market growth even during turbulent periods. Conversely, shares in Moderna witnessed a significant plunge of 21%, despite the drugmaker reporting better-than-expected Q2 results. The sharp decline is largely attributed to a downward revision of its full-year product sales guidance for its respiratory business, as well as increasing competition in the US market coupled with subdued demand in the European Union.
This underlines the challenges facing biotech companies in a rapidly evolving industry. As markets remain sensitive to fluctuating economic data and corporate earnings, investors must remain vigilant in assessing the implications of these developments on their portfolios..