3 Things… 

1. Equity Trends: S&P500 up to 50-Day MA-trend DOWN now and 6.51% below its 200-day MA; NASDAQ is now about 10% below its 200-day MA and indecisive at its 50-Day MA, downtrend firmly in place; Dow at its 50-Day, 5% below its 200-day MA; 51% of the S&P 500 and 41% of the NASDAQ, respectively, are above their 50-Days; Bulls22:Bears50; VIX 23.27; [1]
2. Bonds: The yield on the 2-year Treasury was down about 6 basis points at 3.463%. The yield on the 10-year Treasury traded flat at 3.271%, while the yield on the 30-year added 3 basis points to 3.404%

   The weekly 2-year Treasury note/10-year Treasury note Spread fell to 1.08. Yields move inversely to prices and 1 basis point is equal to 0.01%. [2]

3. Sectors: Best 3-month sectors: Utilities (+2.64); Consumer Discretionary (+0.88%); Staples (+0.29); Crypto/Bitcoin $20,313.00; [3]

This Week’s Quotable

“In my view, the main message in this is an increase in labor supply opens the door to a slower pace of rate hikes beginning in September. The surest path to a soft landing is for supply constraints to alleviate. So that means improvement in global supply chains and a rebound in the U.S. labor supply. The key stat here is the labor force for the first time has now exceeded its pre-pandemic level.” Michael Gapen, chief economist at Bank of America, said Friday September 2, 2022. [5]

Recent Highlights

• Nonfarm Payrolls increased by 315,000 (09/02)
• Unemployment Rate increased to 3.7% (09/02)
• ISM Manufacturing Index remained flat at 52.8 (09/01)
• Construction Spending declined 0.4% (09/01)

In the Markets

U.S. stocks finally managed to stage a comeback on Thursday, with the Dow and S&P 500 snapping their four-day losing streak to begin a new month on a high, as investors shifted focus to a key jobs report on Friday ahead of the Labor Day weekend. However, the Nasdaq ended in negative territory.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) gained 0.5% or 145.99 points to close at 31,656.42 points, after trading lower for most of the day when it had at one point declined as much as 300 points.

The S&P 500 climbed 0.3% or 11.85 points to finish at 3,966.85 points. The index was headed for a fifth straight day of decline before it jumped sharply in the last 10 minutes of the trading session to end in the green. Health care and utilities were the biggest gainers, while energy and material were the worst performers.

The Health Care Select Sector SPDR (XLV) and the Utilities Select Sector SPDR (XLU) gained 1.6% and 1.4%, respectively. The Energy Select Sector SPDR (XLE) lost 2.5%, while the Materials Select Sector SPDR (XLB) declined 1.3%.  Eight of the 11 sectors of the benchmark index ended in positive territory.

The tech-heavy Nasdaq declined 0.3% or 31.08 points to end at 11,785.13 points.

The fear-gauge CBOE Volatility Index (VIX) was down 1.20% to 25.56. Decliners outnumbered advancers on the NYSE by a 2.82-to-1 ratio. On Nasdaq, a 1.96-to-1 ratio favored declining issues. A total of 11.19 billion shares were traded on Thursday, higher than the last 20-session average of 10.51 billion.

Rate Hike Worries Make Trade Volatile

Stocks have been taking a beating since the end of last week following comments from Fed Chair Jerome Powell, who said that the central bank would continue with its steep rate hikes so long it doesn’t a full control over surging inflation. Wall Street opened lower on Thursday, the first day of September, a month historically weak for markets.

Investors have been low on confidence for a while now and the negative sentiment continued for most of the session on Thursday after fresh data showed that last week’s jobless claims fell more than expected to a two-month low, while layoffs also declined in August. Investors felt that these will give Fed another solid reason to continue with its aggressive rate hikes to slow the labor market.

The growing fears of a steep rate hike that could further slow the economy’s growth, saw the 2-year Treasury yield cross 3.5% to reach its highest level since November 2007. This straightaway impacted the rate-sensitive growth stocks like tech and semiconductor stocks.

Shares of NVIDIA Corporation (NVDA) declined plunged 7.7%. Shares of Salesforce, Inc. (CRM) fell 1.7%, while Dropbox, Inc. However, the Dow and the S&P 500 somewhat managed to bounce back and end in the green minutes before the closing bell.

Economic Data

In economic data released on Thursday, jobless claims totaled 232,000 for the week ending Aug 27, decreasing 5,000 from the previous week’s revised level of 243,000. The four-week moving average decreased to 241,500, a decline of 4,000 from the previous week’s revised average of 245,500.

Continuing claims came in at 1,438,000, an increase of 26,000 from the previous week’s revised level. The previous week’s numbers were revised down by 3,000 from 1,415,000 to 1,412,000. The 4-week moving average was 1,428,500, an increase of 4,500 from the previous week’s revised average of 1,424,000.

In other economic data, the Institute for Supply Management’s monthly purchasing managers index (“PMI”) for August came up with a reading of 52.8, unchanged from July.

The Census Bureau said that construction spending during July declined 0.4% to $1,777.3 billion. [6]

Sources: [1][3][4] Stockcharts.com; [2] CNBC.com; stockcharts.com; [5] August jobs report shows a ‘soft landing’ by the Fed is still possible (cnbc.com); [6] Zacks Professional Services, “Today’s Key Market and Economic News” for Friday September 2, 2022;