By Nicholas Jasinski
| Thursday, August 4
Jobs
on Deck. Stocks hovered
around breakeven today as investors looked ahead to tomorrow's July jobs
report. The S&P
500 slipped 0.1%, the
Dow Jones Industrial Average fell
0.3%, and the Nasdaq Composite ticked up 0.1%.
Major indexes have rallied in recent weeks on
the notion that peaks in inflation and Federal Reserve
hawkishness are in the rearview mirror. The data tomorrow morning will be a
major test for that thesis.
On average, economists forecast that the U.S.
economy added 250,000 jobs last month, down from 372,000 in June. The
unemployment rate is seen holding steady at 3.6%.
A job gain of that magnitude would be the
smallest since December 2020, when payrolls declined. Lots of recent data
suggest that a slowdown is in the cards.
Barron's Megan Cassella
wrote
today:
Government data released Tuesday showed job
openings declined by more than 600,000 in June and are now 10% below their
March peak as companies rein in their hiring plans. New claims for unemployment
insurance have steadily climbed to an eight-month high while continuing claims,
though still low, are beginning to inch upward as well.
Tech giants have announced
tens of thousands of job cuts in recent months. And second-quarter earnings
calls across industries are peppered with references to being “even more strategic
and selective in our hiring plans,” as Pinterest Chief Financial Officer
Todd Morgenfeld put it on Monday, or
moving to “right-size our staffing,” as Southwest Airlines CFO
Tammy Romo said last week.
...The July jobs report coming Friday will offer
one of the clearest signs yet of just how much the labor market has been able
to withstand aggressive monetary policy tightening.
Remember, in its fight against inflation, the
Fed is intentionally working to slow down the economy and bring down demand for
goods, services, and labor. Slowing-but-not-collapsing job growth would be a
sign of progress. The 250,000 jobs expected would be right in the goldilocks
zone: not so hot that suggest inflation pressures remain the Fed's primary
problem, and not so cold as to fuel recession fears.
Also helping to bring down inflation is a
continued slide in commodities prices, chiefly oil. The U.S. price of crude has
dropped more than 6% over the past two days, to $88.54 today—its lowest
close since early February.
The latest drop comes after the Organization
of the Petroleum Exporting Countries and its allies said they
would increase oil production by 100,000 barrels a day beginning next month.
The decline in the oil price has been showing
up at the pump too.
"The average cost of a gallon of regular
unleaded gasoline sank to $4.14 on Thursday, down from its June 14 high of
$5.02 a gallon," Barron's Sabrina
Escobar wrote today. "Gas
prices have fallen for 51 straight days. That said, gas prices are still nearly
a dollar more than they were at this time last year, when the average price was
$3.19 a gallon."
DJIA: -0.26% to 32,726.82
S&P 500: -0.08% to 4,151.94
Nasdaq: +0.41% to 12,720.58
The Hot Stock: EPAM Systems +12.3%
The Biggest Loser: Ball -18.6%
Best Sector: Technology +0.5%
Worst Sector: Energy -3.7%
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