Markets advance on a solid jobs report

Dow climbed 304, advancers over decliners better than 5-1 & NAZ gained 113.  The MLP index was up 4+ to the 119s & the REIT index added 2+ to the 416s.  Junk bond funds rose along with stocks & Treasuries were purchased, lowering yields from elevated levels.   Oil went up 2 to the 88s & gold recovered 19 to 1728.

AMJ (Alerian MLP index tracking fund)

 

 

 

Start Using the Leverage of Options and the Power of MarketClub Today!

Four Days, Four Trades, +40% Average Returns
Learn to trade options with MarketClub!

US job growth moderated in Aug from a torrid pace the previous month, but hiring remained solid despite growing headwinds from higher interest rates, scorching-hot inflation & mounting recession fears.  Employers added 315K jobs in Aug, the Labor Dept said in its monthly payroll report, in line with the 300K jobs forecast.  That marks the lowest monthly gain since Apr 2021 & is a major decline from the 526K jump recorded in Jul.  The unemployment rate, meanwhile, unexpectedly ticked up to a 6-month high of 3.7% as the labor force participation rate increased.  Wages also continued to rise, but came in lower than forecasts. Average hourly earnings increased 0.3% for the month & 5.2% from the previous year, slightly below the respective 0.4% & 5.3% estimates.  Job gains were broad-based in Aug, with professional & business services leading the way in hiring, adding 68K new workers.  That was followed by health care (48K), retail trade (44,K) & manufacturing (22K).  Employment in financial activities climbed by 17.  While monthly jobs data is always important, the Federal Reserve is closely watching this particular report for signs the labor market is starting to slow down from its frenzied pace as policymakers try to wrestle inflation, which is still running near a 40-year high, back to 2%.

Unemployment rate unexpectedly edges up, job growth moderates

Federal Reserve Chair Jerome Powell addressed the current inflation challenges at the latest Jackson Hole conference last week, saying that bringing down inflation could create a heavy burden for American families.  "The Federal Open Market Committee's (FOMC) overarching focus right now is to bring inflation back down to our 2% goal," Powell said.  "Price stability is the responsibility of the Federal Reserve and serves as the bedrock of our economy. Without price stability, the economy does not work for anyone."  "In particular, without price stability, we will not achieve a sustained period of strong labor market conditions that benefit all," he continued.  "The burdens of high inflation fall heaviest on those who are least able to bear them."  In his speech, Powell said the Fed will need to take aggressive action in order to bring inflation down, which could put a strain on American families.  "While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses," he added.  "These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain."

Fed Chair Powell says inflation fight could create heavy burden for Americans

Ford US sales last month increased double-digits from a year earlier but were off about 4% from the prior month, as the company & auto industry continue to manage significant supply chain issues.  The automaker reported Aug sales of 158K new vehicles in the US, a 27% increase from Aug 2021, when the its production & sales were significantly impacted by a shortage of semiconductor chips.  Last month's sales were down 3.6% compared to Jul, including an 8% decline in its F-Series pickup trucks.  Those sales were in line with expectations, though.  The company said its Ford brand was America's best-selling brand for a 2nd consecutive month.  The stock was up 30¢.
If you would like to learn more about Ford, click on this link:
club.ino.com/trend/analysis/stock/F?a_aid=CD3289&a_bid=6ae5b6f7

Ford’s new vehicle sales slow in August, in line with expectations

An oversold stock market saw buying from bargain hunters today.  The jobs report was short of great, reflecting an economy that is still in a mild kind of recession.  Dark clouds of high inflation & interest rates have not gone away.

Dow Jones Industrials

 

Markets slip but pare early losses

Dow closed up 145 & above early lows, decliners over advancers 3-1 & NAZ was still off 31.  The MLP index fell 3+ to the 214s & the REIT index was flattish in the 413s.  Junk bond funds saw more selling & Treasuries remained weak, driving substantially higher yields.  Oil dropped 3+ to the 86s & gold sank 19 to 1706 (more on both below).

AMJ (Alerian MLP Index tracking fund)

Free Apple Analysis!

Bring Your Portfolio Into The 21st Century

Four Days, Four Trades, +40% Average Returns
Learn to trade options with MarketClub!

Fall is on the horizon & public health officials are again bracing for another wave of Covid cases.  Over the past 2 years, fall & winter have brought devastating Covid surges that took hundreds of thousands of lives & pushed hospitals to the breaking point.  But US health officials say the nation is in a much different place today due to the arsenal of tools doctors now have to fight the virus.  “We are in a much, much better place. We are in a better place because people have gotten vaccinated and boosted. We’ve got treatments that are widely available,” Dr Ashish Jha, White House Covid response coordinator, said in Aug.  The Centers for Disease Control & Prevention (CDC), in a report published in early Aug, said high levels of immunity in the US population from vaccination & infection have substantially reduced the threat of hospitalization & death from Covid.  The CDC ended its quarantine recommendations for people exposed to the virus last month.  Public health officials are calling on people to stay up to date on their vaccines, but are largely leaving it up to individuals to decide what other precautions they should take based on their health history, risk tolerance & how much Covid is spreading in their communities.  The CDC is taking a more targeted approach that focuses on making sure those at the highest risk of severe illness have access to vaccines, antiviral treatments & other therapeutics to protect their health.

U.S. health officials brace for another fall Covid surge, but with fewer deaths

General Motors (GM) autonomous vehicle unit Cruise has recalled & updated software in 80 self-driving robotaxis after a Jun crash in San Francisco that resulted in minor injuries, according to public filings.  The crash involved a Cruise vehicle, which does not require a human driver, braking harshly while making an unprotected left turn as an oncoming vehicle traveling about 40 mph — 15 mph above the speed limit — switched from a right-turn lane to travel thru the intersection.  In public filings, federal regulators said the recalled software may “incorrectly predict another vehicle’s path or be insufficiently reactive to the sudden path change of a road user.”  Cruise said a software update in Jul was conducted to address the problem.  Following the crash, Cruise said its robotaxi fleet continued to operate but that it temporarily prevented the vehicles from making unprotected left turns.  It said it gradually reintroduced unprotected left turns after the software update.  The crash was especially notable because it occurred a day after California regulators granted Cruise permission to commercialize its robotaxi fleet.  It also happened amid increased scrutiny by the National Highway Traffic Safety Administration, part of the Dept of Transportation, involving such vehicles & advanced driver-assist systems.  The stock was up 20¢.
If you would like to learn more about GM, click on this link:
club.ino.com/trend/analysis/stock/GM?a_aid=CD3289&a_bid=6ae5b6f7

GM’s Cruise recalls and updates self-driving software in cars following crash

The southwestern Chinese metropolis of Chengdu announced a lockdown of its 21.2M residents as it launched 4 days of citywide Covid-19 testing, as some of the country's most populous & economically important cities battle outbreaks.  Residents of Chengdu, the capital of Sichuan province, were ordered to stay home today, with households allowed to send one person per day to shop for necessities, the city gov said.  Chengdu, which reported 157 domestically transmitted infections yesterday, is the largest Chinese city to be locked down since Shanghai in Apr & May.  It remained unclear whether the lockdown would be lifted after the mass testing ends on Sun.  Other major cities including Shenzhen in the south & Dalian in the northeast have also stepped up Covid restrictions this week, ranging from work-from-home requirements to the closure of entertainment businesses in some districts.  The moves curtail the activities of tens of Ms of people, intensifying the challenges for China to minimize the economic impact of a “dynamic-zero” Covid policy that has kept China’s borders mostly shut to intl visitors & make it an outlier as other countries try to live with the coronavirus.  Most of the curbs are intended to last a few days for now, although 2 provincial cities in northern China have extended curbs slightly beyond initial promises.  Chengdu's lockdown sparked panic buying of essentials among residents.

Chengdu locks down 21.2 million people as Chinese cities battle Covid-19

Precious metals prices fell again, with gold tumbling to its lowest settlement in about 6 weeks as investors bet that interest rates will remain higher for longer.  Today's weakness comes on the heels of gold cementing its longest monthly losing streak in 4 years.  Dec gold futures retreated $16 (1%) to settle at $1709 per ounce, with prices for the most-active contract poised marking lowest finish since Jul 20.  While gold is typically seen as an inflation hedge, higher interest rates have hurt the yellow metal by making Treasury bonds & the $ more attractive.  The ICE US Dollar Index a gauge of the $'s strength against a basket of rival currencies, was up 0.8%, while the yield on the 10-year Treasury rose 13 basis points to 3.2599%.

Gold ends at 6-week low, as silver drops to lowest since 2020

Oil futures fell, with US benchmark prices down by more than 3%, as new COVID-19 related lockdowns in China fed worries about a slowdown in energy demand.  China is the key question mark for the crude demand outlook & it seems that reopening momentum will remain elusive.  The mood of traders is also risk-off & that is driving the $ to fresh records, which is putting added pressure on all commodities.  Traders, meanwhile, await a decision by OPEC+ Mon on oil production levels.  Oct WTI crude fell $2.94 (3.3%) to settle at $86.61 a barrel.  Prices based on the front-month contract ended at their lowest since Aug 16.

U.S. oil futures settle with a more than 3% loss

After a weak openings, stocks traded higher by midday.  However enthusiasm faded in the last hour, making this another down day.  Dow is down about 650 this week & the short term outlook is glum with higher interest rates in a recession kind of economy.  Also, for 7 months, WTI has been trading between a low under 90 to about 120.  But most the time, it has been near 90.  OPEC has a big meeting Mon to set news production levels.

Dow Jones Industrials 

Markets fall while Treasury yields soar

Dow dropped 200, decliners over advancers a massive 7-1 & NAZ retreated 221.  The MLP index declined 4+ to the 213s & the REIT index was off 3+ to 410.  Junk bond funds saw more selling & Treasuries were very heavily sold sent yields soaring (more below).  Oil was off another 2+ to the 87s & gold sank 24 to 1701.

AMJ (Alerian MLP index tracking fund)

 

 

 

Start Using the Leverage of Options and the Power of MarketClub Today!

Four Days, Four Trades, +40% Average Returns
Learn to trade options with MarketClub!

The number of Americans filing for unemployment benefits unexpectedly dropped to a 2-month low last week, a sign that employers are continuing to hold on to workers in a historically tight labor market.  The Labor Dept reported that applications for last week fell to 232K from the downwardly revised 237K recorded a week earlier.  That is still above the 2019 pre-pandemic average of 218K claims.  Continuing claims, or the number of Americans who are consecutively receiving unemployment aid rose to 1.4M, up by 26K from the previous week's revised level.  One year ago, nearly 12.2M Americans were receiving unemployment benefits.  For months, the labor market has remained one of the few bright spots in the economy, with the Jul jobs report showing that the unemployment rate dropped to 3.5% for the first time since the beginning of the COVID-19 pandemic.  However, there are signs that the labor market is starting to weaken, with a plethora of companies announcing hiring freezes or layoffs in recent weeks.  The data precedes the release of the more closely watched Aug jobs report tomorrow, which is expected to show that employers hired 300K workers following a gain of 528K in Jul.  The unemployment rate is expected to hold steady at 3.5%, the lowest since the pandemic began 2 years ago.

Jobless claims unexpectedly fall to lowest since June

The 2-year Treasury yield hit a nearly 15-year high on after ADP data the day before showed a significant slowdown in private payroll growth & US. equities continued a sell-off.  The yield on the short-term note hit a high of 3.516%, the highest level since 2007 yesterday & was last trading about 5 basis points higher at 3.501%.  Meanwhile, the 10-year Treasury yield jumped 11 basis points to 3.248% & the yield on the 30-year Treasury bond rose 11 basis points to 3.365%.  Yields move inversely to prices & a basis point is equal to 0.01%.  Yesterday, a jobs report from payroll processing company ADP showed US private payrolls grew by 132K in Aug, a deceleration from 268K in Jul.  ADP's chief economist, Nela Richardson, said it could show the US at an inflection point, moving from “super-charged job gains to something more normal.”  Stock market averages have seen losses in all 4 sessions since Powell's speech Fri & had their worst Aug in 7 years.  Gold prices have fallen to a 6-week low on a stronger $.

2-year Treasury yield hits highest level since 2007 to start September as traders look ahead to jobs data

While some companies have slowed the pace of hiring due to concerns about an economic slowdown, the demand from small businesses for new workers has not yet shown signs of declining, Paychex CEO Marty Mucci said.  “We’re still not really seeing any strong recessionary measures here for small business,” Mucci said.  Hiring at US small businesses with fewer than 50 employees has slowed for 5 straight months, according to data from Paychex & IHS Markit, but Mucci said that has more to do with a lack of applicants than a reflection of small businesses pulling back.  “For small businesses, the toughest thing is they have the demand, and they have the need for workers — they just have a little bit harder time finding it,” he added.  That is counter to what is happening at some larger companies.  In Aug, private payrolls grew by 132K, a drop from the 268K gain seen in Jul, according to ADP’s monthly payroll report.  Mucci said that there are small businesses that are feeling the “inflationary pressure of wages.”  Hourly earnings on average were $30.71 in Aug, up $1.51 from the same month last year, according to Paychex.  Hourly earnings were up 5.18 % in the month, matching a record set in May dating back to 2011.  The difficulty of both finding workers & having to pay higher wages could lead to a continued slowing of hiring activity, Mucci said, adding that “both of these things are going to slow [hiring] down a bit.”

Small businesses are still desperate for workers even as other companies slow hiring

There was some bargaining hunting in the last hour, but Dow is still down 900 this week.  Interest rates keep climbing & thoughts of higher higher rates are keeping the bulls from buying stocks.

Dow Jones Industrials