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Stock Market Today: July 31, 2024

July 31, 2024

The futures markets are well in the green this morning, benefiting from several positive earnings reports, including semiconductor maker Advanced Micro Devices (AMD), which reported stronger-than-expected results. This morning’s Automatic Data Processing (ADP) employment report stated that about 122,000 jobs were added in July, marking the smallest gain in six months, which was less than the Street’s expectations. Trade, transportation, and utilities were amongst the largest job gainers (up 61,000 jobs), followed by construction (up 39,000 jobs). However, professional and business services jobs were amongst the weakest (down 37,000 jobs). Additionally, job stayers got a 4.8% increase in pay, while job switchers got a 7.2% increase in income. Overall, the markets moved upward on this news, suggesting a strong start to the trading day.

Later today, all eyes will be on the Federal Open Market Committee (FOMC) meeting, where that Federal Reserve body will determine interest rate policy. An overwhelming majority of analysts believe that rates will be held steady, however some are speculating that the Federal Reserve will adopt a more-accommodative monetary policy by cutting interest rates at the September meeting. Traders will likely be awaiting any information from the announcement and accompanying press conference from Federal Reserve Chairman Jerome Powell to confirm this view.

The markets started positively yesterday. The S&P CoreLogic Case-Shiller National Home Price Index showed home prices hit a new high in May (up 0.3% month over month), and consumer confidence for July showed an improvement and beat expectations. However, this positive price action was short-lived, with the markets falling throughout much of the day before bouncing back a bit in the final moments of trading. Overall, the S&P 500 finished off 27 points (down 0.50%), and the NASDAQ declined 223 points (down 1.28%). However, the Dow Jones Industrial Average fared much better, rising 203 points (up 0.50%) during the session, despite weak performances out of components Merck (MRK) and Procter & Gamble (PG), which reported underwhelming quarterly results. Market breadth was rather positive, with advancers outpacing decliners by a 1.7-to-1.0 ratio. Energy stocks were amongst the best performers of the day, while technology issues were amongst the weakest.

In commodity news, oil prices fell in the early portion of trading, before rebounding later in the session, as traders eventually priced in higher geopolitical risk in Venezuela and across the Middle East. Elsewhere, U.S. Treasury bond yields fell yesterday, though long-term rates dropped more than those with shorter durations. The Chicago Board Options Exchange Volatility Index, or VIX, commonly known as the fear index, rose yesterday as traders priced in higher levels of stock market volatility.

Several economic reports are scheduled for release in the days ahead. These include initial jobless claims, the Institute for Supply Management’s Manufacturing Index, and U.S. second-quarter productivity on Thursday. On Friday, the U.S. employment report for July will be released, giving insight into the state of the job market. Elsewhere, earnings season will continue, as several hundred companies will report second-quarter results and year-end outlooks in the days ahead. Overall, these should give investors a further reading on how the broader economy is faring. - John E. Seibert III

At the time of this article’s writing, the author held positions in one or more of the companies mentioned.

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