Stocks slipped on Thursday as Wall Street awaited the key jobs report and dissected a slew of economic data ahead of it. Meanwhile, the possibility of an Israeli retaliatory attack against Iran’s oil facilities sent oil soaring for a third day.
The S&P 500 (^GSPC) dropped almost 0.2%, while the Dow Jones Industrial Average (^DJI) fell about 0.4%. The tech-heavy Nasdaq Composite (^IXIC) finished just below the flatline.
Some calm has returned to a market rattled by escalating Mideast tensions that have driven sharp gains in oil prices. Israel has yet to launch its promised retaliation to Iran’s missile strike on Tuesday amid efforts by Western and regional leaders to stabilize the situation.
But the burgeoning crisis helped drive oil prices higher for a third day. Brent crude (BZ=F) and West Texas Intermediate (CL=F) futures both gained more than 5% following comments from President Biden regarding the possibility of an Israeli retaliatory attack against Iran’s oil facilities.
The market received more signs of general cooling in the labor market on Thursday. Weekly jobless claims ticked up slightly from the prior week. Meanwhile, planned layoffs in the US dipped from a five-month high, according to a report from Challenger, Gray and Christmas. But the firm’s vice president said the data showed the labor market is at an “inflection point.”
Any new signs of deterioration in the labor market could prompt the Federal Reserve to follow up its 0.5% interest rate cut last month with another jumbo move, despite policymakers’ expectation of a 0.25% cut in November.
On the corporate front, Tesla (TSLA) stock continued to slide in the wake of downbeat delivery figures, as Reuters reported the EV maker has halted US online orders for its cheapest Model 3. Shares declined more than 3% on Thursday.
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Stocks close lower with monthly jobs data on deck, oil surges 5% on escalating Israel-Iran tensions
Stocks closed lower on Thursday as investors await Friday’s monthly jobs report for clues about the health of the labor market while keeping a watchful eye on the Middle East conflict after oil spiked during the session.
The S&P 500 (^GSPC) fell almost 0.2%. The Dow Jones Industrial Average (^DJI) fell 0.4%, while the tech-heavy Nasdaq Composite (^IXIC) slipped just below the flatline.
Energy (XLE) stocks moved higher as oil spiked over fears of supply disruptions stemming from an expected Israeli retaliatory strike against Iran. Remarks from President Biden over the possibility of an attack on Iran’s oil facilities helped push crude prices higher.
On Friday morning investors will get a fresh read on the state of the labor market with the release of the monthly jobs report. As Josh Schafer reports, the data is expected to serve as the latest piece of evidence that the labor market cooled off in 2024 but isn’t rapidly weakening at a pace that would prompt a larger interest rate cut from the Federal Reserve in November.
2024 payrolls are on pre-pandemic trend
The September jobs report is set for release at 8:30 a.m. ET as investors ponder how quickly the labor market is cooling.
Truist co-chief investment officer Keith Lerner shared a chart in a note to clients on Wednesday night that helps set the stage for Friday’s report. Lerner points out that the average monthly job additions for 2024 are roughly in line with the pace seen before the pandemic.
He notes this comparison shows a labor market that’s “cooling but still not weak.” This is a sentiment some economists have been sharing as of late too.
With another 150,000 jobs expected to be added in September, the focus of Friday’s report is likely not going to be how many people were hired. It’ll likely once again be about how many people didn’t find work. The unemployment rate is expected to have stayed flat at 4.2%. Should it unexpectedly move higher, conversation about larger Fed rate cut in November could heat up.
Mortgage rates rose slightly this week, mirroring a jump in the Treasury yields that serve as a benchmark.
The average 30-year fixed-rate mortgage increased to 6.12% as of Thursday, up from a two-year low of 6.08% a week earlier, according to Freddie Mac data. Fifteen-year mortgages averaged 5.25%, up from 5.16% in the same period a week ago.
The increase comes as 10-year Treasury yields, which mortgage rates closely track, have moved higher as investors assess the health of the economy and rising tensions in the Middle East.
Tesla (TSLA) shares slumped more than 4% on Thursday, dragging on the Consumer Discretionary (XLY) sector.
The EV giant slid to session lows after Bloomberg reported employees were told the company’s chief information officer is leaving the company days before Tesla’s robotaxi unveiling in California. Nagesh Saldi reported directly to CEO Elon Musk.
Walmart, Target, Nike among retailers affected if port strike lasts beyond this week
Yahoo Finance’s Brooke DiPalma reports:
As the East and Gulf Coast ports remain closed for the first time in five decades, retailers are bracing for the potential impact.
Should the port strike last beyond this week, retailer margins, inventory, and sales could start to feel the effects.
“It’s Walmart, Target, Amazon … Costco, all the big box guys that are multi-product retailers. That’s who’s going to have an impact,” Telsey Advisory Group’s Joe Feldman told Yahoo Finance.
Amazon (AMZN) shares were down more than 1% on Thursday amid an overall market slump.
An ongoing US dockworkers strike could cost the economy up to $4.5 billion daily and shave a half percentage point off of US GDP for the fourth quarter, analysts say.
The most impacted US imports are building materials, European wines, and fruits from Latin America — most of which come through East Coast ports, according to data compiled by Jason Miller, a professor of supply chain management at Michigan State University.
The September jobs report is expected to serve as the latest piece of evidence that the labor market has cooled off in 2024 but isn’t rapidly weakening at a pace that would prompt a larger interest rate cut from the Federal Reserve in November.
The monthly report slated for release at 8:30 a.m. ET on Friday, is expected to show nonfarm payrolls rose by 150,000 in September while the unemployment rate held flat at 4.2%, according to consensus estimates compiled by Bloomberg.
The key question entering Friday’s release is whether the data will reflect significant cooling in the labor market, which could prompt another large Fed interest rate cut.
Energy, Utilities, Tech stocks rise while rest of sectors slump
Energy (XLE) stocks outperformed the broader markets on Thursday as oil spiked over concerns of supply disruptions stemming from the Middle East conflict.
The S&P 500 Utilities (XLU) sector also gained slightly.
The Tech (XLK) sector hovered above the flatline thanks to a rise in Nvidia (NVDA) stock.
Shares of the AI chip giant rose after CEO Jensen Huang told CNBC that demand for the company’s next-generation Blackwell chips is “insane.”
Thursday’s sector action
Oil spikes nearly 4% on supply disruption fears
Oil rose for a third straight session on Thursday over fears of supply disruptions stemming from the Middle East conflict.
West Texas Intermediate futures (CL=F) gained more than 4%, while Brent futures (BZ=F), the international benchmark, advanced nearly 4% on expectations that Israel will retaliate against Iran after Tehran’s ballistic missile strike on Tuesday.
“Futures remain in a nervous trade” about the chance an Israeli response could hit oil facilities in Iran, Dennis Kissler, BOK Financial’s SVP of trading, wrote in a note on Thursday.
Concerns over possible interruptions through the Strait of Hormuz, a chokepoint for oil shipments, have also sent prices higher.
Nvidia climbs 4%, helps Nasdaq climb into green territory
Nvidia shares (NVDA) rose more than 4% on Thursday morning, helping lift the Nasdaq Composite (^IXIC).
The tech-heavy index erased early morning losses to climb into green territory as the AI chip heavyweight and other semiconductor stocks gained.
Stocks open lower with monthly jobs report on deck, Middle East tensions high
Stocks opened lower on Thursday as investors turn their attention this week to monthly jobs data for clues about the health of the economy while keeping a close eye on the Middle East conflict.
The S&P 500 (^GSPC) fell 0.3%. The Dow Jones Industrial Average (^DJI) fell 0.3%, while the tech-heavy Nasdaq Composite (^IXIC) moved lower by 0.5% after all three averages closed above the flat line on Wednesday.
In commodities, oil prices were up Thursday as the Israel-Iran crisis has raised concerns of supply disruptions in the region. Brent (BZ=F) and West Texas Intermediate (CL=F) were each up more than 2% in early trading.
