Markets hover as traders wait for rate cut clues

Dow edged up 11, advancers over decliners 2-1 & NAZ added 41.  The MLP index inched up about 1 to 281 & the REIT index was off 1 to the 412s.  Junk bond funds were little changed & Treasuries had a little buying which reduced yields slightly (more below).  Oil was even in the low 73s & gold slid back 8 to 2541 on profit taking.

Dow Jones Industrials

The US economy created 818K fewer jobs than originally reported in the 12-month period thru Mar 2024, the Labor Dept reported.  As part of its preliminary annual benchmark revisions to the nonfarm payroll numbers, the Bureau of Labor Statistics (BLS) said the actual job growth was nearly 30% less than the initially reported 2.9M from Apr 2023 thru Mar of the following year.  Traders had been watching the numbers closely, with many economists expecting a sizeable reduction in the originally reported numbers.  Even with the revisions, job creation during the period stood at more than 2M, but the report could be seen as indication that the labor market is not as strong as the previous BLS reporting had made it out to be.  At the sector level, the biggest downward revision came in professional & business services, where job growth was 358K less.  Other areas revised lower included leisure & hospitality (-150K), manufacturing (-115K) & trade, transportation & utilities (-104K).  Within the trade category, retail trade numbers were cut by 129K.  A few sectors saw upward revisions, including private education & health services (87K), transportation & warehousing (56K) & other services (21K).

Nonfarm payroll growth revised down by 818,000, Labor Department says

Target (TGT), a Dividend Aristocrat, sales grew about 3% in its fiscal 2nd qtr, a return to growth after a prolonged stretch of sluggish sales & squeezed profits.  The discounter beat earnings & revenue expectations, as shoppers made more visits to TGT stores & website, & bought more discretionary items like clothing.  Even so, the company stuck by its previous full-year sales forecast & struck a cautious note.  TGT expects comparable sales for the full year to be flat to up 2%, but said it now expects the increase will likely be in the lower ½ of the range.  TGT raised its profit guidance, however, saying it expects adjusted EPS of $9 - $9.70, up from the previous guidance of $8.60 - $9.60.  COO Michael Fiddelke said TGT took a “measured approach” with its outlook because it's hard to predict consumers' mindsets & the state of the economy in the coming months.  “While we’ve been pleased with our performance so far this year, and our view of the consumer remains largely the same, the range of possibilities and the macroeconomic backdrop in consumer data and in our business remains unusually high,” he said.  EPS jumped to $2.57 from $1.80 in the year-ago qtr, for a more than 40% year-over-year increase.  Total revenue rose from $24.8M in the prior year.  Comparable sales climbed 2% in the qtr, the first time in 5 qtrs that TGT posted a gain.  The industry metric tracks sales online & at stores open at least 13 months.  Digital sales drove most of those gains, growing 8.7% in the qtr, as more customers used same-day services like curbside pickup & home delivery.  Comparable store sales rose slightly, up 0.7%.  Customer traffic across its website & store grew 3% in the 2nd qtr compared with the year-ago period.  The average size of customers' shopping baskets, however, declined slightly.  Discretionary sales, which have been under pressure across the retail industry, improved.  TGT said apparel sales, for instance, grew more than 3% in the qtr compared with the year-ago period.  The stock jumped 16.23 (11%).

Target shares spike as profits rise, despite cautious sales outlook

The 10-year Treasury  yield was little changed as investors awaited the release of minutes from the latest Federal Reserve meeting.  The yield on the 10-year Treasury was down by less than 1 basis point at 3.818% & the 2-year Treasury yield slid to 3.966% after dipping by more than 3 basis points.  Yields & prices move in opposite directions & 1 basis point equals 0.01%.  Investors looked to the release of minutes from the Federal Reserve's last meeting, at which it left rates unchanged but hinted at a potential Sep interest rate cut.  Since that meeting, uncertainty about the economy & worries about an economic slowdown have at times raised concerns about whether the Fed should have already begun cutting interest rates.  However, retail sales figures & weekly initial jobless claims data last week somewhat eased investor concerns.  Markets are firmly pricing in an interest rate decrease for Sep.  CME Group's FedWatch tool showed that traders are more so questioning how big of a cut comes.

10-year Treasury yield holds steady ahead of Fed meeting minutes release

Stocks are eyeing a return to recovery from an early Aug sell-off as focus intensifies on the labor market as a factor in the Fed's policymaking, given inflation seems to be subsiding.  But overall, investors are treading cautiously ahead of Jerome Powell's appearance at the Jackson Hole symposium on Fri.  Expectations for a Sep rate cut are running high & his comments will be closely watched for signs a 0.5% reduction is on the table.  The jobs data above did not disturb investors as it makes rate cuts more likely.