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Flat Finish to Volatile Session Ahead of Jobs Report
03-May-18 16:30 ET
Dow +5.17 at 23930.15, Nasdaq -12.75 at 7088.15, S&P -5.94 at 2629.73

https://www.briefing.com/investor/markets/stock-market-update/2018/5/3/flat-finish-to-volatile-session-ahead-of-jobs-report.htm

[BRIEFING.COM] Stocks got off to a bad start on Thursday, but rebounded sharply in the afternoon to end the session little changed. The S&P 500 and the Nasdaq Composite settled a tick lower, losing 0.2% apiece, the Dow Jones Industrial Average finished flat, and the Russell 2000 underperformed, losing 0.5%.

It looked like things might get ugly shortly after the opening bell, as the S&P 500 quickly dropped below its 200-day moving average, losing as much as 1.6%. The financial sector led that initial slide, with AIG (AIG 51.94, -2.90) showing particular weakness after missing earnings estimates for the first quarter; AIG shares ended the session lower by 5.3%.

Stocks drifted near their lows of the day for a couple of hours before the technology and materials sectors led a sharp move higher. The tech group was helped by chipmakers, especially NVIDIA (NVDA 232.99, +6.68), which climbed 3.0% after being upgraded to 'Overweight' from 'Equal Weight' at Barclays. Meanwhile, the materials group did relatively well even though its top component by market cap -- DowDuPont (DWDP 63.47, -0.02) -- struggled to advance after releasing its first quarter earnings -- which came in better-than-expected. DWDP shares ended flat.

The S&P 500 did touch positive territory at the top of that intraday rally, but slipped into the close -- possibly due to the uncertainty surrounding Friday's release of the Employment Situation Report for April. The report always has market-moving potential, but it may carry some extra weight this time around considering Treasury yields aren't far off from multi-year highs. The benchmark 10-yr yield, for instance, finished at 2.95% on Thursday -- which is about eight basis points below the more than four-year high it hit last week.

Tesla (TSLA 284.45, -16.70) received a lot of attention in the media on Thursday after its CEO, Elon Musk, unconventionally dismissed analysts' questions in the company's earnings call, calling them "boring"; shares of Tesla ended lower by 5.6%. On the upside, shares of Kellogg (K 58.15, +1.50) and Kraft Heinz (KHC 54.95, +0.75) rallied 2.7% and 1.4%, respectively, after both companies reported better-than-expected earnings for the first quarter.

In the end, three S&P sectors finished Thursday in the green -- industrials (+0.2%), materials (+0.3%), and technology (+0.3%) -- while eight finished in the red. The heavily-weighted financials and health care groups were the weakest performers, losing 0.9% apiece, but no other laggard lost more than 0.4%.

Investors received a big batch of economic data on Thursday that included the preliminary readings for first quarter Productivity and Unit Labor Costs, the March Trade Balance report, weekly Initial Claims, March Factory Orders, and the ISM Services Index for April:

The preliminary unit labor costs rose 2.7% during the first quarter, while the Briefing.com consensus expected an increase of 3.0%. The preliminary productivity reading showed an increase of 0.7%, while the Briefing.com consensus expected an increase of 0.8%.
The key takeaway from the report is that productivity is improving, yet it is still running at relatively weak levels. On a year-over-year basis, productivity was up 1.3% versus the 0.7% annual average for 2007 to 2017. The long-term average from 1947 to 2017 is 2.1%.
The latest weekly initial jobless claims count totaled 211,000, while the Briefing.com consensus expected a reading of 220,000. Today's tally was above the unrevised prior week count of 209,000. As for continuing claims, they declined to 1.756 million from a revised count of 1.833 million (from 1.837 million).
The key takeaway from the report is that it continues to underscore a condition of tightening supply in the labor market.
The March trade balance showed a deficit of $49.0 billion (Briefing.com consensus -$49.8 billion). The February deficit was revised to $57.7 billion from $57.6 billion.
The key takeaway from the report is that it will continue to feed the Trump Administration's trade fire as goods deficits were recorded with China, the EU, Mexico, Japan, Germany, OPEC, and Canada.
The ISM Services Index for April slipped to 56.8 (Briefing.com consensus 58.3) from an unrevised reading of 58.8. in March.
The key takeaway from the report is that it will feed into the slowdown narrative that has been building with the flattening yield curve, even though there is still broad-based strength in the components that drive the overall index reading. Separately, all 18 non-manufacturing industries reported growth in April.
The Factory Orders report for March showed an increase of 1.6% (Briefing.com consensus +1.2%). The February reading was revised to +1.6% from +1.2%.
The key takeaway from the report is that it showed a dip in business spending in March, evidenced by the 0.4% decrease in orders for nondefense capital goods excluding aircraft.

Friday's lone economic report -- the Employment Situation report for April -- will be released at 8:30 AM ET.

Nasdaq Composite: +2.7% YTD
Russell 2000: +0.7% YTD
S&P 500: -1.6% YTD
Dow Jones Industrial Average: -3.2% YTD