September 6, 2024

As has been the pattern lately, the market could once again not hold some early gains, then spent the afternoon drifting lower before making another weak upside move very late in the day.

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This depressing pattern means that the market has undergone its worst week since April, unless something very dramatic happens today with the release of the August jobs report at 8:30am.

As a result of these modest negative moves the Dow ended lower by 219 points to 40,755 led by selling in AMGN, CAT and UNH. The S&P ended lower for the third straight day, off by 16 points down to 5503 on a mixture of some large technology stocks selling off plus weakness in financials.  

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The Nasdaq made a weak late rally to end 43 points higher as NVDA had the nerve to end around 1 dollar higher after getting blasted lower for the first two days of the week. And how about AAPL and AAPL finally going higher for a change and even GOOG had the nerve to gain, which is somewhat of a miracle with all of the talk about potential antitrust charge against it. And TSLA, of all things, has finally awoken higher this week as well.  

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So sure enough, just when the Nasdaq finally showed a gain, AVGO Came out with its earnings report which generated selling which put the Nasdaq futures way down in the overnight session and only a better jobs report this morning is going to be able to save this index today.  

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The Russell 2000 index has nothing going for it and just followed the others lower for a 13 point drop to 2132 and what was interesting was the despite the overall negative day, the VIX really took it on the chin with a decline down to 19.90 and I have suggested selling the way up in the sky calls in the 80 to 100 range for next Wednesday morning and how in the world are they ever going to get that high when at the depth of the financial crisis in 2008, the best that they could get to was 80, and so be it.  

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Treasury yields also slipped a bit in the bond market following the mixed economic reports. The ADP report for today’s jobs report I am not going to honor due to their awful history in this regards and the weekly unemployment claims came in a little lower at 227,000.  

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A report released later in the morning offered more optimism, with the August ISM survey showing a gain up to 51.5 which is now that 19th straight advance.  

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The job market’s performance this morning could dictate how big of a cut to interest rates the Federal Reserve will deliver at its next meeting later this month.  

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After keeping its main interest rate at a two-decade high to stifle inflation, the Federal Reserve has hinted it is about to begin cutting rates in order to protect the job market and keep the overall economy from sliding into a recession. The question is if that ends up being too little, too late.  

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In the bond market, the yield on the 10-year Treasury eased to 3.73% from 3.76% late Wednesday. It is down from 4.70% in April, which is a significant move for the bond market.  

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Perhaps more importantly for investors, the 10-year yield is flirting with the end of a more than two-year stretch where it was lower than the two-year Treasury yield. That is an unusual occurrence called an “inverted yield curve.” Usually, longer-term yields are higher than shorter-term yields.  

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Many investors see an inverted yield curve as a warning of a coming recession, and the inversion since the summer of 2022 has been a key talking point for market pessimists. Often, an inverted yield curve flips back to normal ahead of a recession as traders cement their expectations for coming cuts to interest rates by the Fed. But the 2020 pandemic created a recession and resulting recovery that have often defied predictions and conventional wisdoms.  

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The two-year Treasury yield was sitting at 3.74%, just above the 10-year yield.  

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ODFL fell to one of the sharpest losses in the S&P after reporting discouraging revenue trends for August. It cited “softness in the domestic economy,” along with lower fuel surcharge revenue for the weakness. The freight company’s stock fell 4.9%.  

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VZ slipped 0.4% after it announced it is buying FYBR in a $20 billion deal to strengthen its fiber network. The latter, which soared nearly 38% the day before, gave back 9.5%.  

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On the winning end was TSLA, which gained 5% after laying out a roadmap for upcoming artificial-intelligence developments, including the possibility of full self-driving in Europe and China.  

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BLUE flew 7% higher after raising its forecast for revenue in the summer. It said it is seeing better performance in the Latin America region particularly and that it picked up business when technology outages in July forced rivals to cancel flights.  

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Japan’s Nikkei 225 fell 1.1% after strong data on growth in wages there raised expectations for another hike to interest rates.  

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Earnings season is quieting down now with the following: yesterday -  CASY, CPRT lower and LE higher; today  AVGO, DOCU, BIG lower and IOT higher.  

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Economic reports will see: yesterday - weekly jobless claims were slightly lower at 227,000, ISM Services index report for August was 51,5; today – the big one, August non-farm payroll survey came in at 142,000 and the unemployment rate was lowered to 4.2%. The July number was lowered again to 86K from 114K. Average hourly earnings rose by 0.4% and 4.2% year over year. The labor force participation rate remained at 62.7.