Stock Market Today – Thursday, Aug 04: What You Need to Know

Stock Indices Finish Thursday’s Session Mixed

Last Updated 4:20 PM EST

Stock indices finished today’s trading session mixed. The Nasdaq 100 closed 0.44% higher, while the S&P 500 and the Dow Jones Industrial Average declined 0.08% and 0.26%, respectively.

The energy sector was the session’s laggard, as it fell by 3.71%. Conversely, the technology sector (XLK) was the session’s leader, with a gain of 0.46%. In addition, WTI crude oil continues to get hammered, as it lost 3%, reaching $88 per barrel.

Furthermore, the U.S. 10-Year Treasury yield decreased to 2.67%, a decline of 3.6 basis points. Similarly, the Two-Year Treasury yield also decreased, as it hovers around 3.03%. This brings the spread between them to -36 basis points. The negative spread indicates that investors still have fears of a recession.

Compared to yesterday, the market is pricing in a higher chance of a lower Fed Funds rate for the end of the year. This is likely due to recession fears that have investors hoping the Federal Reserve won’t be as aggressive.

In fact, the market’s expectations for a rate in the range of 3.5% to 3.75% decreased to 28.3%, which is down from yesterday’s expectations of 33.7%. In addition, the market is now also assigning a 47.7% probability to a range of 3.25% to 3.5%. For reference, investors had assigned a 43.3% chance yesterday.

Prices at the Pump Continue to Decline

Last Updated 3:00PM EST

Stock indices are in the green heading into the final hour of today’s trading session. As of 3:00 p.m. EST, the Nasdaq 100 is up 0.3%, while the S&P 500 and the Dow Jones Industrial Average are down 0.02% and 0.2%, respectively.

WTI crude oil is currently hovering around $88 per barrel, trading not too far away from its session low of $87.60 per barrel. The price has pulled back to levels last seen in February.

Consumers will be happy to see that the commodity’s continued downtrend has led to lower gas prices across the country. The national average for regular gas was last $4.139 per gallon, down from yesterday’s reading of $4.163. This is significantly lower than the all-time high of $5.016 per gallon on June 14.

The highest prices can be found in California, where prices are substantially higher than the national average, at $5.539 per gallon. On the other hand, Texas is the state with the lowest gas prices, at $3.644 per gallon.

It’s likely that this downward trend will continue going forward as the Federal Reserve looks to raise interest rates to fight inflation. However, higher rates will destroy demand throughout the whole economy.

Initial Jobless Claims Come in Higher than Expected

Last Updated 12:10PM EST

Stock indices are mixed halfway into today’s trading session. As of 12:10 p.m. EST, the Nasdaq 100 is up 0.1%, while the S&P 500 and the Dow Jones Industrial Average are down 0.1% and 0.2%, respectively.

On Thursday, the Department of Labor released its Initial Jobless Claims report, which came in worse than expected. In the past week, 260,000 people filed for unemployment insurance for the first time. Expectations were for 259,000 individuals.

When using the four-week average, initial jobless claims were 254,750, up from last week’s reading of 248,750. It’s worth noting that this figure has been steadily trending upwards each week since the start of April 2022.

In addition, Continuing Jobless Claims, which measures the number of unemployed people who qualify for unemployment insurance, came in at 1.416 million, worse than the forecast of 1.370 million and higher than last week’s 1.368 million.

Continuing Jobless Claims are currently sitting near their lowest levels since 1970. Relatively speaking, this suggests that individuals aren’t struggling to find other jobs after being laid off.

However, this figure has been trending slightly upwards since the beginning of June. It will be interesting to see if this trend continues as interest rates rise while economic growth continues to slow down.

Stocks are Flat to Start Thursday’s Trading Session

Last Updated 10:00AM EST

Stock indices are little changed 30 minutes into today’s trading session. As of 10:00 a.m. EST, the Dow Jones Industrial Average is down 0.07%, while the S&P 500 and the Nasdaq 100 are up 0.02% and 0.2%, respectively.

The energy sector (XLE) is the laggard so far, as it is down 2.2%. Conversely, the consumer discretionary (XLY) is the session’s leader, with a gain of 0.7%.

WTI crude oil fell below $90 per barrel as demand for gasoline remains lower than pre-pandemic levels, which is the result of high prices at the pump. In addition, crude stockpiles increased last week. As a result, the price is hovering around the mid-$89 per barrel range, down roughly 1.3% from the previous close.

Meanwhile, bond yields are lower, as the U.S. 10-Year Treasury yield is now hovering around 2.68%. This represents a decrease of more than two basis points from the previous close.

Similar movements can be seen with the Two-Year yield, which is now at 3.06%. However, the spread between the 10-Year and Two-Year U.S. Treasury yields is still negative, as it currently sits at -38 basis points.

Pre-Market Update

Stock futures trended higher early Thursday morning following a strong session of solid earnings reports and encouraging economic data.

Futures on the Dow Jones Industrial Average (DJIA) gained 0.14%, while those on the S&P 500 (SPX) moved 0.20% higher, as of 7.19 a.m. EST, Thursday. Meanwhile, the Nasdaq 100 (NDX) futures advanced by 0.29%.

PayPal (PYPL) shares climbed 9.3% after activist investor Elliott Management revealed that it holds a stake worth $2 billion in the company. Starbucks (SBUX) also jumped 4.3% after posting quarterly results that reflected continued demand.

At the end of the regular trading hours Wednesday, the major indexes bounced back with the Dow, the S&P 500, and the Nasdaq 100, gaining 1.29%, 1.56%, and 2.73%, respectively.

Later on Thursday, Eli Lilly (LLY), Kellogg (K), Alibaba (BABA), and ConocoPhillips (COP) are set to report quarterly results.

Nancy Pelosi Concludes Taiwan Meeting Smoothly

Moreover, investors breathed easy after U.S. House Speaker Nancy Pelosi concluded her meeting with the Taiwan President without any incidence.

However, although the meeting did not stir any evident tensions between U.S. and China, it appears to have prompted China to display its power to isolate the island of Taiwan. China’s navy was reported to have taken a position around the island country to hold live-fire drills.

It should be noted that if China cuts Taiwan off from the global trade scene, it can be disruptive, considering Taiwan is an important exporter of products such as semiconductors.

Upbeat Economic Data

A key economic data that buoyed investor sentiments on Wednesday was July’s U.S. services sector report which revealed that the sector continued to grow. This came as good news for tech stocks, which popped after the report was released.

Moreover, Federal Reserve President James Bullard notified that he does not believe the U.S. to be in a recession yet, and that job gains and relatively low employment supports his belief. This comment reassured investors.

Later on Thursday, investors are awaiting the weekly jobless claims, which will give them a better insight into the current job market.

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