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S&P Falls Again As Tech Shares Weigh For Second Day In A Row
06-Sep-18 16:20 ET
Dow +20.88 at 25995.87, Nasdaq -72.45 at 7922.75, S&P -10.55 at 2877.79

https://www.briefing.com/investor/markets/stock-market-update/2018/9/6/s-and-p-falls-again-as-tech-shares-weigh-for-second-day-in-a-row.htm

[BRIEFING.COM] The S&P 500 fell for the fourth time in five sessions on Thursday, with the typically high-flying technology sector underperforming for the second day in a row. The S&P 500 finished lower by 0.4%, while the tech-heavy Nasdaq tumbled 0.9%. The blue-chip Dow outperformed, however, tacking on 0.1%.

Thursday's session began on a flat note, but technology shares soon began selling off, pulling the S&P 500 into negative territory. At its worst mark of the day, the S&P 500 was down 0.7%. Tech giants like Facebook (FB 162.53, -4.65), Apple (AAPL 223.10, -3.77), and Alphabet (GOOG 1171.44, -15.04) lost between 1.3% and 2.8%, and their FAANG peer Amazon (AMZN 1958.31, -36.51) dropped 1.8%.

Chipmakers were also a drag on the tech space, which finished lower by 0.8%, with Micron (MU 44.65, -4.89) pacing the retreat after announcing that NAND pricing declined in the third quarter, triggering concerns about end demand/excess supply that go hand-in-hand with remarks about pricing declines. MU shares lost 9.9%.

Meanwhile, the energy sector (-1.9%) was the worst-performing group, weighed down by a drop in the price of crude oil. WTI crude futures settled lower by 1.4% at $67.81/bbl, with nearly all of that loss coming after the release of the EIA's weekly inventory report, which showed a 4.3 million barrel drop in crude stockpiles, but a 1.8 million barrel jump in inventories of gasoline.

The heavily-weighted financial sector (-0.6%) also declined, as did the consumer discretionary space (-0.3%), but six of the seven remaining sectors finished in the green. The lightly-weighted telecom services sector (+0.7%) finished atop the day's leaderboard, and the industrial space (+0.3%) was another notable outperformer.

In Washington, U.S. and Canadian officials continued to negotiate on trade, and the world awaited news from the White House, which could impose another round of tariffs on Chinese goods as soon as a public comment period ends at midnight. This round of duties will target $200 billion worth of goods, including furniture, tires, bicycles, and lighting products. Beijing has vowed to retaliate.

Elsewhere, U.S. Treasuries rallied on Thursday, sending the benchmark 10-yr yield two basis points lower to 2.88%; the U.S. Dollar Index slipped 0.1% to 94.98; and the CBOE Volatility Index, which is often referred to as the "investor fear gauge" jumped 4.2% to 14.49, touching its highest level in three weeks.

Reviewing Thursday's big batch of economic data, which included the August ADP Employment Change report, the revised readings for Q2 Productivity and Unit Labor Costs, the weekly Initial Claims report, July Factory Orders, and the August ISM Services Index:

The ADP National Employment Report showed an increase of 163,000 in August (Briefing.com consensus 186,000), and the July reading was revised to 217,000 (from 219,000).
The ADP reading is seen as a prelude to the BLS's nonfarm payrolls figure (Briefing.com consensus 187,000), which will be released on Friday.
Second quarter unit labor costs were revised to -1.0% (Briefing.com consensus -0.9%) from -0.9% in the preliminary reading, and Q2 productivity was left unrevised at +2.9%, as expected.
The key takeaway from the revised report is the same as the advance estimate: labor costs look to be in check, which will facilitate a gradual tightening path for the Federal Reserve.
The latest weekly initial jobless claims count totaled 203,000, while the Briefing.com consensus expected a reading of 214,000. Today's tally was below the unrevised prior week count of 213,000. As for continuing claims, they declined to 1.707 million from a revised count of 1.710 million (from 1.708 million).
The key takeaway from the report is that it is consistent with a tight labor market, as employers appear reluctant to cut payrolls.
The Factory Orders report for July showed a decrease of 0.8% (Briefing.com consensus -0.6%), and the June reading was revised to +0.6% from +0.7%.
The key takeaway from the report is that a decline in shipments of nondefense capital goods excluding aircraft will weigh on Q3 GDP estimates, but today's reading was consistent with the Advance Durable Orders report for July, meaning the decline should have been expected.
The ISM Services Index for August ticked up to 58.5 (Briefing.com consensus 56.5) from an unrevised reading of 55.7 in July.
The key takeaway from the report is that a solid rebound from a July pullback indicates continued health in the non-manufacturing sector.

Looking ahead, investors will receive the Employment Situation report for August on Friday, with the Briefing.com consensus expecting an increase of 187,000 in nonfarm payrolls, an increase of 0.2% in average hourly earnings, and an unemployment rate of 3.9%, unchanged from July.

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