On Thursday, US benchmark equity indexes presented a mixed performance as investors evaluated recent labor market data while anticipating the official jobs report for August. The Dow Jones Industrial Average experienced a decline of 0.5%, closing at 40,755.8, while the S&P 500 fell 0.3% to end at 5,503.4.
In contrast, the Nasdaq Composite managed to rise by 0.3%, reaching 17,127.7. Within the sectors, health care suffered the most significant declines, while consumer discretionary stocks enjoyed the largest gains. Turning to economic indicators, findings from Automatic Data Processing ($ADP) revealed that employment growth in the US private sector had slowed for the fifth consecutive month in August.
Despite this, wage growth remained stable. Notably, US-based employers reported a reduction of 75,891 jobs last month, marking a staggering 193% increase from July and a 1% increase compared to a year ago, as per data from Challenger, Gray & Christmas. In a parallel trend, weekly applications for unemployment insurance in the US saw a decline greater than analysts had anticipated, according to government data. "Initial claims for unemployment insurance benefits continue to signify that layoffs are not the primary catalyst for the softening in the labor market," noted Oxford Economics in a communication to its clients.
"However, the Federal Reserve cannot afford to be complacent; the central bank must initiate interest rate cuts." Further supporting the narrative of a labor market under pressure, official statistics released on Wednesday indicated that US job openings fell in July, with layoffs surpassing the number of quits. Looking ahead to Friday’s data release from the Bureau of Labor Statistics, expectations gauge that the US economy potentially added 165,000 nonfarm jobs last month.
This figure indicates a notable acceleration from July's reported gain of 114,000, according to a consensus compiled by Bloomberg. On a brighter note, the growth of the US services sector accelerated in August, buoyed by a rise in new orders, as highlighted by two separate surveys conducted by the Institute for Supply Management and S&P Global ($SPGI). In the bond market, the US 10-year yield decreased by 4.1 basis points, settling at 3.73%, while the two-year yield dipped 2.9 basis points to 3.74%. Focusing on corporate news, shares of Copart ($CPRT) tumbled by 6.7%, marking the steepest drop on the Nasdaq and among the worst performers on the S&P 500.
The decline followed the announcement of the company’s fiscal fourth-quarter earnings, which fell short of Wall Street projections. In a significant acquisition move, Verizon Communications ($VZ) announced an agreement to acquire Frontier Communications Parent ($FYBR) in an all-cash transaction valued at approximately $20 billion, aimed at enhancing its fiber network.
Verizon’s shares slipped 0.4%, while Frontier Communications faced a sharper decline, plummeting by 9.5%. Positive momentum was seen with Tesla ($TSLA), which emerged as one of the top performers on both the S&P 500 and Nasdaq, gaining 4.9%. This rise followed the announcement that the electric vehicle manufacturer plans to introduce its driver assistance system, dubbed Full Self-Driving, in China and Europe during the first quarter, pending regulatory approvals. In commodity markets, West Texas Intermediate crude oil prices remained relatively stable at $69.18 a barrel.
Moreover, the Energy Information Administration reported a drop in commercial crude stockpiles in the US, with a decrease of 6.9 million barrels to 418.3 million barrels for the week ending Friday, surpassing the consensus forecast of a 300,000-barrel decline, according to a Bloomberg survey. In the broader context of oil supply, analysts from ING stated that the Organization of the Petroleum Exporting Countries and its allies are slated to begin unwinding additional voluntary cuts from October 2024 to September 2025.
However, potential delays in these plans may arise due to demand concerns, especially with Brent crude trading below $80 per barrel, alongside uncertainties stemming from an ongoing dispute in Libya that could prompt OPEC+ to increase supply. Warren Patterson, Head of Commodities Strategy at ING, provided this insight in a recent note. As for precious metals, gold appreciated by 0.8%, reaching a price of $2,546 per troy ounce, and silver rose by 2%, trading at $29.14 per ounce..