By Nicholas Jasinski
| Wednesday, October 5
U-Turn. Coming off a nearly 6% gain
in the past two days, the S&P 500 opened deep in the
red this morning, down some 1.2%. Recent days' buying appetite wasn't gone for
good, however. The index rallied through the day to trade in positive territory
by about 3 p.m., then slipped slightly to close down just 0.2%.
The Dow Jones Industrial Average and Nasdaq
Composite followed similar patterns, opening low,
reversing their losses, then losing their gains in the last hour of trading.
The Dow closed down 0.1% and the Nasdaq slipped 0.2%.
The rally to start this week was based on bad-news-is-good-news
reasoning. JOLTS and ISM
manufacturing data both suggested a softening U.S. labor
market, which could help alleviate inflationary pressures in the economy and
give the Federal Reserve cover to increase
interest rates less aggressively. Bond yields fell and stocks rose on Monday
and Tuesday.
But today's economic data showed that
optimistic narrative isn't a done deal, and that the Fed still has plenty of
work ahead of it.
September private payrolls figures from ADP this
morning showed 208,000 new jobs, beating the 200,000 consensus estimate. The
prior month's tally was also upwardly revised to 185,000, from 132,000. It
could be a preview of this Friday's September employment report from the Bureau
of Labor Statistics.
Also this morning, ISM's services gauge for
September came in at 56.7, above the consensus for 56.0 and about matching
August's figure. Not exactly screaming "recession" either.
Maybe the economy isn't in such poor shape to
prompt a Fed pivot after all. Treasury yields across the curve rose today,
undoing a portion of recent days' moves lower. Major stock indexes are still 5%
higher today than they were just at the end of last week, but investors
certainly aren't out of the woods yet.
Friday morning's September jobs report will be
the next major release that could potentially shape that macro narrative. Then
third-quarter earnings season picks up next week, which could bring the focus
back to the micro. In aggregate, S&P 500 earnings per share are seen rising
3.1% from a year ago.
DJIA: -0.14% to 30,273.87
S&P 500: -0.20% to 3,783.28
Nasdaq: -0.25% to 11,148.64
The Hot Stock: Illumina +6.6%
The Biggest Loser: Lumen Technologies -9.5%
Best Sector: Energy +2.1%
Worst Sector: Utilities -2.2%
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