On Thursday, US equity indexes experienced a mixed trading session as market participants turned their attention to the highly anticipated nonfarm payrolls report. This comes on the heels of a surprising deceleration in job growth among private businesses, coupled with a decrease in jobless claims. The S&P 500 index recorded a decline of 0.4%, closing at 5,499.4, while the Dow Jones Industrial Average fell by 0.8% to finish at 40,665.4.
In contrast, the Nasdaq Composite managed a slight uptick of 0.1%, reaching 17,104.1 after navigating down earlier in the day. A broad retreat was observed across various sectors, with notable exceptions being consumer discretionary and communication services. Among the sharpest declines were the industrials, healthcare, and financials sectors. According to the employment report released by the ADP Institute, private payrolls increased by 99,000 in August, a drop from the impressive 111,000 rise recorded in July.
This number was below analyst expectations compiled by Bloomberg, which projected a gain of 145,000. The current ADP report, paired with an overall pessimistic outlook surrounding the labor market, has cultivated a market sentiment leaning toward the anticipation of a weak nonfarm payroll number on Friday. Brent Donnelly from Spectra Markets highlighted these sentiments in a client note, referring to the forthcoming August nonfarm payrolls.
The disappointing job figures for July has raised fears that the US economy might be heading towards a challenging slowdown. In the bond market, Treasury yields exhibited a downward trend during the session. The yield on the 10-year Treasury note fell by 3.9 basis points to 3.73%, while the two-year Treasury yield declined by 2 basis points to 3.75%. Additional economic insights revealed a reduction in US initial jobless claims, which dropped to 227,000 for the week ending on August 31, down from an upwardly revised figure of 232,000 from the previous week.
This figure was in contrast to expectations for a decrease to 230,000, as per a Bloomberg survey. The four-week moving average also saw a decline, decreasing by 1,750 to reach 230,000. In the services sector, the Institute for Supply Management reported that the US services index edged upward to 51.5 in August, slightly up from 51.4 in July, despite projections indicating no changes.
Furthermore, the S&P Global US services index was revised up to 55.7 for August, an increase from the initial flash reading of 55.2, although expectations were set for a downward revision to 55.1 as per another Bloomberg survey. Turning to commodities, West Texas Intermediate crude oil prices slid 0.3% to $68.98 per barrel, relinquishing earlier gains observed earlier in the trading session. On the corporate front, Copart ($CPRT) issued a report indicating that its fiscal Q4 earnings took a hit compared to the previous year, failing to meet analysts' expectations.
The company’s sales for the three months ended July 31 also fell short of forecasts, resulting in shares plummeting 7.2% during intraday trading, ranking among the day's worst performers on the S&P 500 and Nasdaq. In contrast, McKesson ($MCK) announced a deal to offload its Canada-based Rexall and Well.ca businesses to Birch Hill Equity Partners, although financial details of the transaction were not disclosed.
Following this announcement, McKesson's shares tumbled by 9.8%, marking it as the steepest decliner on the S&P 500. Meanwhile, Merck ($MRK) stated that it successfully concluded negotiations with the pan-Canadian Pharmaceutical Alliance regarding its drug Welireg as of August 30. This alliance represents various Canadian provinces and federal programs, facilitating the drug’s pathway towards public reimbursement.
As a result, Merck's shares surged by 3.3% during intraday trading, making it the top performer on the Dow. In the precious metals market, gold prices increased by 0.7%, reaching $2,544.10 an ounce, while silver saw a robust jump of 1.9%, closing at $29.10. Overall, market dynamics remain cautious as investors brace for the impending nonfarm payrolls report, with various economic indicators pointing towards an uncertain labor market landscape..