- Stocks finished mixed in a quiet trading day.
- Oil called the tune. Its morning rise sent stocks higher, its afternoon fall sent them lower.
- Today hinges on the job report.
With China’s markets closed to celebrate victory over Japan, U.S. markets rose and fell with oil in relatively quiet trading. At one point in the morning WTI crude was up over $48/barrel, before falling to a loss and then settling at a little above where it started, at $46.86/barrel. Brent finished at $50.81, and natural gas closed at $2.718/mcf.
That was the pattern of stock trading, too, with stocks rising in the morning by as much as 1.31%, then falling to as low as down 0.5% on the NASDAQ before ending the day mixed. The Dow finished at 16,374, up 23.38 or 0.14%, the S&P 500 finished up 2.27 or 0.12% to 1,951, while the NASDAQ finished down 16.48 or 0.35% at 4,733. The Volatility Index, or VIX, fell 1.84% to 25.61. Wednesday's uptrend in the markets ended with yesterdays mixed results, as all eyes are pinned on jobs data that's due to be out today, before the bell.
A Quiet Day of Little Movement
Most stocks traded in a narrow range, with the exception of the biggest tech stocks, where red ink reigned. Facebook (NASDAQ:FB) fell 1.8% to $88.27, Apple (NASDAQ:AAPL) fell almost 2% to $110.54, and Google (NASDAQ:GOOGL) fell 1% to $638.24. Amazon (NASDAQ:AMZN) was down 0.95% to $505.70. Many traders breathed a sigh of relief on a quiet New York Stock Exchange trading floor.
It was a day of reversion to the mean, with old-line tech companies such as IBM (NYSE:IBM) rising 1.3% to $146.91, Computer Sciences (NYSE:CSC) going up 0.9% to $61.63, and Microsoft (NASDAQ:MSFT) gaining 0.62% to $43.63. There was some excitement in the morning over reports Steven Spielberg had quit Disney (NYSE:DIS), which finished up 10 cents to $101.99, and may move distribution for his Dreamworks studio movies to Comcast’s Universal Studios, which rose 42 cents/share to finish at $56.30, but those stocks too traded in narrow ranges.
Asia’s quiet gave strength to Europe, where the German DAX rose 2.68%, the French CAC-40 rose 2.17% and the English FTSE finished up 1.82%. The European closes coincided with the highs of the U.S. day. The value of the Euro, however, fell about 1% against the dollar, to $1.11, and it’s believed that the flood of refugees now coming onto the continent from the Syrian war will force German authorities to accept an end to austerity, maybe launching a new round of Qualitative Easing in order to spur growth.
Jobs and Interest Rates
Traders were generally nervous about two coming events, tomorrow’s non-farm payrolls number from the U.S. Bureau of Labor Statistics, due to come out at 8:30 Eastern, and the possibility of a Federal Reserve rate hike in the middle of the month.
The two are linked. The thinking is that if the jobs number comes in week, at 170,000 new jobs or less, the idea of a rate hike will be off the table, and markets will rise. If the jobs number comes in too strong, say at 280,000 or above, it will increase the likelihood of a hike. The expected number is 220,000.
It’s a paradox. Economists do not like to see interest rates at the “zero bound,” because it hurts savings and lowers the spread banks can get for loans. But rates have been stuck near zero for years, many stock investors don’t know how they will make money if money costs money, so it’s assumed that rising yields, meaning lower prices on bonds, will also cause money to flood out of stocks.
So What Happens In The Markets This Morning?
It all hinges on the jobs report. With China still shut, and Europe pre-occupied with its refugee crisis, the U.S. market will take its cues from the jobs number. The ADP number earlier this week was 190,000, and if it comes in that way expect gains.
Generally, however, the best expectation is for a quiet day. While China comes back to work Monday, the U.S. will celebrate Labor Day, the unofficial end of summer. Many traders will be returning to their desks on Tuesday, refreshed and ready for action.
That’s when the action will heat up.
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