Market Snapshot
briefing.com
| Dow | 35208.51 | +144.26 | (0.41%) | | Nasdaq | 14835.74 | -59.36 | (-0.40%) | | SP 500 | 4436.52 | +7.42 | (0.17%) | | 10-yr Note | -30/32 | 1.309 |
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| | NYSE | Adv 1921 | Dec 1313 | Vol 754.5 mln | | Nasdaq | Adv 2216 | Dec 2048 | Vol 4.1 bln |
Industry Watch
| Strong: Financials, Energy, Materials, Industrials |
| | Weak: Consumer Discretionary, Real Estate, Information Technology, Health Care |
Moving the Market
-- S&P 500 and Dow close at all-time highs
-- July employment report was better than expected and showed improvement in nearly every category
-- 10-yr yield jumps to 1.29%
-- Value stocks outperformed growth stocks
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Good jobs report leads to record highs for S&P 500 and Dow
06-Aug-21 16:15 ET
Dow +144.26 at 35208.51, Nasdaq -59.36 at 14835.74, S&P +7.42 at 4436.52
[BRIEFING.COM] The S&P 500 (+0.2%) and Dow Jones Industrial Average (+0.4%) closed at record highs on Friday following the better-than-expected employment report for July. The Russell 2000 gained 0.5% while the Nasdaq Composite declined 0.4% amid a jump in long-term interest rates.
Key highlights from the jobs report included nonfarm payrolls increasing by 943,000 (Briefing.com consensus 925,000), the unemployment rate decreasing to 5.4% (Briefing.com consensus 5.6%) from 5.9% in June, and average hourly earnings increasing 0.4% m/m (Briefing.com consensus 0.3%).
The report was replete with improvements in nearly every category, which painted the case for the Fed to consider tapering asset purchases sooner rather than later. The market also took the report at face value and adopted a pro-growth mindset.
For example, the cyclical financials (+2.0%), materials (+1.5%), and energy (+0.9%) sectors rose between 1-2%, the 10-yr yield rose seven basis points to 1.29%, and the U.S. Dollar Index advanced 0.6% to 92.79.
The higher rates, however, exerted valuation-oriented pressure on the growth stocks within the information technology (-0.1%) and consumer discretionary (-0.7%) sectors. The counter-cyclical health care (-0.1%), real estate (-0.2%), consumer staples (-0.1%), and utilities (-0.1%) sectors also closed lower.
The discrepancy between growth and value stocks was best represented by the 0.6% gain in the Russell 1000 Value Index, versus the 0.4% decline in the Russell 1000 Growth Index. They both ended the week with equal gains of 0.9%, though.
In corporate news, Norwegian Cruise Line (NCLH 24.89, +0.71, +2.9%) supported the cyclical trade with an observation that booking and pricing trends for 2022 continued to be very positive. Expedia Group (EXPE 148.89, -12.80, -7.9%) said there's still some strong demand in travel plans, but the stock was hit by cautious commentary regarding the Delta variant.
WTI crude futures fell 1.2%, or $0.81, to $68.28/bbl, which misaligned with the growth optimism since there remained concerns about the Delta variant impacting oil demand. The 2-yr yield was unchanged at 0.20%.
Reviewing Friday's economic data, which featured the Employment Situation report for July:
- The July employment report was a good one. Nonfarm payrolls increased by 943,000, average hourly earnings rose 0.4% month-over-month and were up 4.0% year-over-year, the unemployment rate fell to 5.4%, and the average workweek increased from a year ago. Job gains were widespread across industry groups, though it was no surprise that leisure and hospitality (+380,000) saw the biggest gain.
- The key takeaway from the report is that it is apt to drive the Fed toward a decision to taper its asset purchases sooner rather than later.
- July nonfarm payrolls increased by 943,000 (Briefing.com consensus 925,000). The 3-month average for total nonfarm payrolls increased to 832,000 from 607,000 in June. June nonfarm payrolls revised to 938,000 from 850,000. May nonfarm payrolls revised to 614,000 from 583,000.
- July private sector payrolls increased by 703,000 (Briefing.com consensus 650,000). June private sector payrolls revised to 769,000 from 662,000. May private sector payrolls revised to 555,000 from 516,000.
- July unemployment rate was 5.4% (Briefing.com consensus 5.6%), versus 5.9% in June. Persons unemployed for 27 weeks or more accounted for 39.3% of the unemployed versus 42.1% in June. The U6 unemployment rate, which accounts for unemployed and underemployed workers, was 9.2%, versus 9.8% in June.
- July average hourly earnings increased 0.4% (Briefing.com consensus 0.3%) versus an upwardly revised 0.4% increase (from 0.3%) in June. Over the last 12 months, average hourly earnings have risen 4.0%, versus 3.7% for the 12 months ending in June.
- The average workweek in July was 34.8 hours (Briefing.com consensus 34.7), versus an upwardly revised 34.8 hours (from 34.7) in June. Manufacturing workweek increased 0.2 hours to 40.5 hours. Factory overtime unchanged at 3.2 hours.
- The labor force participation rate was 61.7%, versus 61.6% in June.
- The employment-population ratio increased to 58.4% from 58.0%.
- Consumer credit increased by $37.6 bln in June (Briefing.com consensus $20.5B) after increasing an upwardly revised $36.7 bln (from $35.3 bln) in May.
- The key takeaway from the report is that the expansion in consumer credit in June was the largest since December 2010 with healthy demand for both revolving and nonrevolving credit. Revolving credit saw its biggest increase since January 2006.
- Wholesale inventories increased 1.1% m/m in June (Briefing.com consensus 0.8%) following a downwardly revised 0.8% increase (+1.3%) in May.
Looking ahead, investors will receive the JOLTS - Job Opening report for June on Monday.
- S&P 500 +18.1% YTD
- Nasdaq Composite +15.1% YTD
- Dow Jones Industrial Average +15.0% YTD
- Russell 2000 +13.8% YTD
Crude futures settle lower amid demand concerns
06-Aug-21 15:25 ET
Dow +127.28 at 35191.53, Nasdaq -68.39 at 14826.71, S&P +5.57 at 4434.67
[BRIEFING.COM] The S&P 500 is up 0.1% and is on track to close at a record high.
One last look at the sectors shows financials (+2.0%), materials (+1.5%), and energy (+1.0%) up between 1-2%, while the consumer discretionary (-0.8%), information technology (-0.2%), health care (-0.2%), and real estate (-0.2%) sectors lag in negative territory.
WTI crude futures settled lower by 1.2%, or $0.81, to $68.28/bbl amid ongoing demand concerns due to the spread of the Delta variant.
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