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Stock market closes mixed, muted response to August employment report
06-Sep-19 16:15 ET
Dow +69.31 at 26797.44, Nasdaq -13.75 at 8103.11, S&P +2.71 at 2978.71

https://www.briefing.com/stock-market-update

[BRIEFING.COM] The stock market finished mixed on Friday, as it cooled off from a two-day rally amid a lackluster response to the August employment report. The S&P 500 (+0.1%) and Dow Jones Industrial Average (+0.3%) closed just above their unchanged marks, while the Nasdaq Composite (-0.2%) and Russell 2000 (-0.4%) closed slightly lower.

From a headline perspective, the employment report appeared to disappoint as jobs growth came in below expectations. Nonfarm payrolls increased by 130,000 (Briefing.com consensus 171,000), and nonfarm private payrolls increased by 96,000 (Briefing.com consensus 145,000).

The positive spin, however, was that the labor participation rate, employment-population ratio, and total number of employed workers all increased from July. Aggregate earnings were also up, while the unemployment rate held firm at 3.7% as expected. More people working and earning money is a good indication that discretionary spending could continue to support the economic expansion, one which Fed Chair Powell repeated the Fed is intent on sustaining.

Today's action didn't reflect much enthusiasm, though, but that wasn't out of the ordinary after a sharp two-day rally in stocks. Friday's leaders were an eclectic group: energy (+0.5%), materials (+0.5%), and consumer staples (+0.5%). The utilities (-0.3%), communication services (-0.2%), and information technology (-0.2%) sectors finished in negative territory.

Facebook (FB 187.49, -3.41, -1.8%) dragged on the communication services sector after New York announced a formal antitrust investigation into the company. Lululemon athletica (LULU 203.14, +14.73, +7.8%) impressed investors with positive results and upbeat guidance, which may have helped buying interest trickle over into the S&P 500 consumer discretionary sector (+0.2%).

DocuSign (DOCU 56.27, +10.02, +21.7%) was another standout, rising over 20% after the software company beat revenue estimates and issued upside revenue guidance.

U.S. Treasuries finished slightly higher after a sharp sell-off yesterday. The 2-yr yield and the 10-yr yield declined two basis points each to 1.52% and 1.55% respectively. The U.S. Dollar Index finished flat at 98.42. WTI crude increased 0.3%, or $0.14, to $56.45/bbl.

Reviewing Friday's economic data, which featured the Economic Situation Report for August:

The Employment Situation Report for August conveyed that payroll growth is slowing and that wage growth remains modest. Job growth has averaged 158,000 per month so far this year, versus the average monthly gain of 223,000 in 2018. Average hourly earnings, meanwhile, were up 3.2% yr/yr in August, versus 3.3% in July.
The key takeaway from the August employment report is that it isn't a distinctly disappointing report, even though the nonfarm payrolls and nonfarm private payrolls numbers might create that impression. The labor force participation rate increased to 63.2% from 63.0% in July (and 62.7% yr ago), the employment-population ratio rose to 60.9% from 60.7% (and 60.3% yr ago), and the total number of employed workers increased by 590,000 versus July. In sum, more people are working and earning money, which is a good recipe for increased consumer spending.

Looking ahead, investors will receive the Consumer Credit report for July on Monday.

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