On Thursday, the US benchmark equity indexes experienced mixed results as investors digested crucial labor market data while awaiting the official jobs report for August. The Dow Jones Industrial Average saw a decline of 0.5%, settling at 40,755.8, while the S&P 500 dropped 0.3%, closing at 5,503.4.
In contrast, the Nasdaq Composite managed a modest gain, rising 0.3% to reach 17,127.7. The health care sector led the decliners, indicating concerns over rising costs and regulatory pressures, whereas the consumer discretionary sector posted the most significant gains, suggesting robust spending trends among consumers. In the forefront of economic analyses, the private sector employment growth in the US experienced a slowdown for the fifth consecutive month in August, with wage growth remaining steady.
This trend was highlighted in a report released by Automatic Data Processing, which indicated that US-based employers cut 75,891 jobs in August, marking a staggering 193% increase in job losses from July, and a 1% increase from the same month last year, according to the latest findings by Challenger, Gray & Christmas. Moreover, government data revealed a more significant decrease in weekly applications for unemployment insurance than analysts had anticipated.
Oxford Economics pointed out, "Initial claims for unemployment insurance benefits continue to signal that layoffs are not the primary catalyst for the softening in the labor market. However, the Federal Reserve can't be complacent, and the central bank needs to begin cutting interest rates." On a related note, official data released on Wednesday indicated that US job openings dropped in July, while the rate of layoffs surpassed that of voluntary quits, confirming a cautious outlook for the job market.
Expectation grew ahead of a report from the Bureau of Labor Statistics, which is anticipated to reveal that the US economy added 165,000 nonfarm jobs in August, demonstrating an increase from the 114,000 jobs reported for July, according to a consensus compiled by Bloomberg. In the services sector, growth accelerated in August, bolstered by a rise in new orders, as indicated by two separate surveys carried out by the Institute for Supply Management and S&P Global.
The US 10-year yield fell by 3.7 basis points to 3.73%, whereas the two-year rate decreased by 2.2 basis points to 3.75%, reflecting investor sentiment amid evolving economic dynamics. In company-specific news, shares of Copart witnessed a sharp decline of 6.7%, marking the steepest drop on the Nasdaq and landing among the worst performances on the S&P 500.
This downturn followed the company’s fiscal fourth-quarter earnings announcement, which fell short of Wall Street's expectations. Verizon Communications entered into an agreement to acquire Frontier Communications Parent in an all-cash deal valued at approximately $20 billion, signaling an effort to enhance its fiber network capabilities.
Following this announcement, Verizon shares fell by 0.4%, while shares of Frontier Communications plummeted by 9.5%. In a positive development, Tesla emerged as one of the top performers on both the S&P 500 and Nasdaq, with shares increasing by 4.9%. This uptick followed the news that the electric vehicle manufacturer aims to launch its Full Self-Driving driver assistance system in China and Europe during the first quarter, pending regulatory approvals. On the commodities front, West Texas Intermediate crude oil prices dipped slightly by 0.1%, settling at $69.13 per barrel.
The Energy Information Administration reported that commercial crude stockpiles in the US fell by 6.9 million barrels to 418.3 million barrels for the week ending Friday, contrasting with the Bloomberg consensus prediction of a 300,000-barrel decrease. In precious metals trading, gold prices surged by 0.8% to $2,545.30 per troy ounce, while silver experienced a 2% gain, reaching $29.13 per ounce.
The market continues to navigate through these economic indicators, balancing growth expectations and potential risks ahead..