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September 9, 2024
DOW: 40,736
S&P: 5,439
Nasdaq: 16,741
10YR T-Note: 3.71%
Bitcoin: 55,182
VIX: 21.00
Gold: $2,525.10
Crude Oil: $68.42
Prices Current as of 11:14 am
Source: CNBC
Don Selkin, the creator and innovator of the "Fair Value" numbers, as its Chief Market Strategist on the Newbridge platform has given CNBC and its Predecessor, these numbers every day for the over 40 years - never missing a single day, as well as given the fair value for the Nasdaq 100 futures since their introduction in 1996 and the Dow Jones stock index futures since 1997. Mr. Selkin has also been quoted in several publications including but not limited to Bloomberg News, New York Post, Reuters, and The New York Times. Mr. Selkin's Fair Value numbers are included in the U.S.
Futures Report broadcast on CNBC every day before the market
opens attributing "Newbridge Securities" as the source. In addition, NSC provides to its professionals, their clients and the public access to Don Selkin's more in depth financial market views.
Another rout hit the market to end a historic lower week, with formerly high-flying technology stocks again taking the brunt, after the August jobs report came in weak enough to add worries about the economy.
The S&P 500 dropped by an awful 95 points to end at 5498 which was its worst week since March 2023. BRCM, NVDA and other tech companies drove the market lower amid ongoing concerns that their prices soared too high in the boom around artificial intelligence, and they dragged the Nasdaq composite down by a market-leading 2.6%.
The Dow Jones Industrial Average dropped 410 points to 40,345 after erasing a morning gain of 250 points. The Nasdaq, which is most sensitive to the technology sector, plummeted by 435 down to 16,690 while the Russell 2000 Index of small stocks nosedived as well down to 2091.
It was the Nasdaq’s worst week since late 2022 and it ended lower by 5.8% for the week and the worst start to September since 1946 for the S&P, so what we saw was history in the making.
And of course the VIX loved this downside market misery and rose to 22.38.
Sharp swings also hit the bond market, where Treasury yields tumbled, recovered and then fell again after the jobs report showed U.S. employers hired fewer workers in August than economists expected. It was billed as the most important jobs report of the year, and it showed a second straight month where hiring came in below forecasts. It also followed recent reports showing weakness in manufacturing and some other areas in the economy.
Such a softening of the job market is actually just what the Federal Reserve and its chair, Jerome Powell, have been trying to get in order to cool off high inflation, but only to a certain extent and the data is now testing Chair Powell’s stated limits.
Friday’s data raised questions about how much the Federal Reserve will cut its main interest rate by at its September 18th meeting as the Fed is about to turn its focus more toward protecting the job market and preventing a recession after keeping the federal funds rate at a two-decade high for more than a year.
Cuts to interest rates can boost investment prices, but the worry is that the Fed may be moving too late. If a recession does hit, it would undercut corporate profits and erase the benefits from lower rates.
Still, the jobs report did include some encouraging data points. In addition to 142,000 jobs, the unemployment rate improved to 4.2% from 4.3% a month earlier. That was better than economists expected. And even if August’s hiring was weaker than forecast, it was still better than July’s pace. Also, average hourly earnings gained 0.4% and higher by 4.2% for the year and the labor force participation rate remained at 62.7%. But the total jobs numbers were reduced by 86,000 for the previous two months.
Christopher Waller, a member of the Fed’s board of governors, said in a speech after the jobs report’s release that “I believe we should be data dependent, but not overreact to any data point, including the latest data.”
“While the labor market has clearly cooled, based on the evidence I see, I do not believe the economy is in a recession or necessarily headed for one soon,” he said.
While Waller said he thinks a “series of reductions” to rates is appropriate given that a slowing job market now looks like the bigger threat for the economy than high inflation, he said the ultimate pace and depth of those cuts is still to be determined.
All the uncertainty sent Treasury yields on a wild ride in the bond market as traders tried to handicap the Fed’s next moves.
The two-year Treasury yield initially fell as low as 3.64% after the release of the jobs report, before quickly climbing back above 3.76%. It then dropped back to 3.66% following Waller’s comments, down from 3.74% late Thursday.
Despite its dismal week, the S&P remains just 4.6% below its all-time high set in July. It is still up 13.4% for 2024 so far, which counts as a good year.
A big reason for Friday’s sharp drops was weakness for some big tech stocks that had been benefiting from the AI boom.
AVGO tumbled by 10% despite reporting profit and revenue for the latest quarter that were above analysts’ forecasts, thanks in part to AI. The chip company said it expects to make $14 billion in revenue this quarter, which was slightly below analysts’ expectations of $14.11 billion, according to FactSet. Its stock sank 16% for the week.
Other chip companies also fell Friday, including a 4% drop for Nvidia. After soaring earlier this year as its revenue surged on the AI frenzy, its stock has been shaky since mid-July as investors question whether they took it too high. Because of its massive size, its stock is one of the most influential and it fell by 14% over the week. That is even though it has continued to top analysts’ growth expectations.
On the winning side was U.S. Steel, which rose 4.3% after the CEO of rival CLF told MSNBC that his company would still be interested in acquiring it if the administration were to block its proposed sale to Japan’s Nippon Steel.
Earnings this week include: tonight – ORCL; Tuesday – GME, PLAY; Wednesday – VRB; Thursday – ADBE, KR.
Economic reports will have: Wednesday - the important August C.P.I.; Thursday – August P.P.I., weekly jobless claims; Friday – initial September U. of Michigan Consumer Sentiment Survey.
