Sector Investing

[ReturntoSender]

Wall Street ends week with more losses, as trade concerns overshadow jobs data
02-Aug-19 16:20 ET
Dow -98.41 at 26485.01, Nasdaq -107.05 at 8004.08, S&P -21.51 at 2932.05

https://www.briefing.com/investor/markets/stock-market-update/2019/8/2/wall-street-ends-week-with-more-losses-as-trade-concerns-overshadow-jobs-data.htm

[BRIEFING.COM] Wall Street ended Friday with more losses, as investors remained fixated on possible China tariffs and brushed aside an in-line employment report. The S&P 500 (-0.7%) and Dow Jones Industrial Average (-0.4%) finished well off session lows, while the Nasdaq Composite (-1.3%) and Russell 2000 (-1.1%) fell over 1.0%.

China promised retaliatory measures against the U.S. if President Trump follows through on his tariff threat. This didn't catch too many market participants by surprise, but the lack of positive news on Friday contributed to the follow-through selling.

Most of Friday's decline, however, took place in the first 90 minutes of action. Each of the major averages fell below their 50-day moving averages, which appeared to welcome a buy-the-dip mentality that abated the early selling pressure. The Russell 2000 was the only major U.S. index that closed below the key technical level.

The S&P 500 information technology (-1.7%) and energy (-1.3%) sectors led today's decline, with the latter unable to benefit from the rebound in oil ($55.74/bbl, +$1.75, +3.2%). The defensive-oriented real estate (+0.8%), consumer staples (+0.1%), and utilities (+0.1%) sectors were the lone sectors that finished higher.

July's Employment Situation Report didn't produce much interest. The data came mostly in-line with expectations, and some speculated whether the trade uncertainty would slow down the pace of U.S. hiring activity or wage growth. Nonfarm payrolls increased 164,000 (Briefing.com consensus 160,000), which coincided with decent wage growth and an unemployment rate that stayed near a 50-year low.

In earnings news, Dow components Chevron (CVX 120.73, -0.01, unch) and Exxon Mobil (XOM 71.75, -0.71, -1.0%) provided mixed results. Square (SQ 69.60, -11.38, -14.1%) and NetApp (NTAP 46.04, -11.67, -20.2%) issued disappointing guidance. Newell Brands (NWL 15.34, +1.91, +14.2%) and Pinterest (PINS 33.57, +5.27, +18.6%) provided upbeats results and guidance.

U.S. Treasuries continued to see increased demand, which pushed yields lower in a curve-flattening trade. The 2-yr yield declined one basis point to 1.71%, and the 10-yr yield declined four basis points to 1.86%. The U.S. Dollar Index declined 0.3% to 98.11.

Reviewing Friday's economic data, which included the July Employment Situation Report, the revised July reading for the University of Michigan Index of Consumer Sentiment, the Trade Balance report for June, and Factory Orders for June:

Job growth was decent in July, wage growth was decent, the unemployment rate stayed near a 50-year low with a slight pickup in the labor force participation rate, and there was a sizable drop in the number of long-term unemployed persons.
The key takeaway from the report is that it was a good report in aggregate, which means it didn't offer enough bad news to convince the Fed that it needs to cut the fed funds rate again in September.
The final July reading for the University of Michigan Index of Consumer Sentiment checked in at 98.4 (Briefing.com consensus 98.6) versus the preliminary reading of 98.2 and the final June reading of 98.2.
The key takeaway from the report is that the economic uncertainty and trade uncertainty that has bothered the Fed has yet to bother the consumer in a noticeably adverse way.
The trade deficit for June narrowed slightly to $55.2 billion (Briefing.com consensus -$54.6 billion) from $55.3 billion in May, as imports (-$4.6 billion) fell slightly more than exports (-$4.4 billion).
The key takeaway from a growth standpoint is that both exports and imports fell in June.
Factory orders increased 0.6% in June (Briefing.com consensus 0.8%) on the heels of downwardly revised 1.3% decline (from -0.7%) in May, which followed a 1.2% decline in April.
The key takeaway from the report is that nondefense capital goods orders, excluding aircraft -- a proxy for business spending -- were revised down to 1.5% from the preliminary report showing a 1.9% increase. Shipments of those same goods were up 0.3% versus 0.6% in the preliminary report. That will compute as a drag in the second estimate for Q2 GDP.

Looking ahead, investors will receive the ISM Non-Manufacturing index for July on Monday.

Nasdaq Composite +20.6% YTD
S&P 500 +17.0% YTD
Russell 2000 +13.7% YTD
Dow Jones Industrial Average +13.5% YTD