Before The Bell
The futures market began yesterday evening positively, ahead of the start of September. The stock market has risen for seven months in a row, and traders will look to see if this streak can continue. They will be focusing on a few key economic reports today, including the Automatic Data Processing (ADP) Employment report for August, which will give some insight into how well the labor market has been performing. This report showed that private payrolls added 374,000 positions in August, versus the consensus estimate calling for 600,000 jobs. This underperformance could point to a lackluster report on Friday's nonfarm payrolls figures, though investors should note that the ADP report has been an erratic predictor of the monthly labor figures from the government.
Meantime, other economic news will come out later today, including the ISM Manufacturing Index, which is due at 10:00 A.M. (EDT). This report will show how well U.S. manufacturers are holding up in the face of supply-chain and shipping issues, which has limited many inputs, such as semiconductors. Moreover, a small, but notable, number of earnings reports are due both before the opening bell and after the session closes today, which could drive sentiment changes. Altogether, the market looks like it will start strongly today, with the futures holding most of their gains following the ADP employment news.
The stock market started positively yesterday, continuing the solid performance seen on Monday. Traders continued to buy stocks after Federal Reserve Chairman Powell signaled an accommodative interest-rate policy during his Jackson Hole, Wyoming symposium speech. But early positivity lasted only so long, as fears about slowing growth worldwide and higher inflation caused investors to reduce some of their holdings. The market turned to the downside through the afternoon, and the major indices fell into the red. Altogether, the S&P 500 was down six points, the Dow Jones Industrial Average was lower by 39 points, and the NASDAQ was off seven points. Still, the market did not move that much by the end, as it appears traders are looking to see how Friday's payrolls report will turn out.
Market breadth, though, was slightly positive, as advancers outpaced decliners by a 1.3-to-1.0 ratio. This suggests that the losers were down more than the winners were up, which caused the indices to finish to the downside. REITs were among the best performers on the day, aided by a reduction in interest rates. Conversely, energy issues were among the weakest, hurt by a decline in the related commodities.
In commodity news, oil prices continued to fall yesterday, as traders became more concerned that supply will outpace demand. This was partially attributable to increasing doubts about the strength of the recovery in China. Meanwhile, U.S. Treasury bond yields were a mixed bag, with near-term rates falling and long-term rates rising a bit. Still, these moves were not large, but the steepening of the yield curve usually is a positive for banks' earnings. The CBOE Volatility Index (VIX) was higher yesterday, as traders' demand for options protection increased. - John E. Seibert III
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
