Stock Market Today – Thursday, September 1: What You Need to Know

Stocks Finish Thursday’s Session in the Green

Last Updated 4:30PM EST

Stock indices finished today’s trading session in the green after spending most of the day in negative territory. The Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 increased by 0.46%, 0.3%, and 0.02%, respectively.

The energy sector was the session’s laggard, as it fell by 2.46%. Conversely, the healthcare sector (XLV) was the session’s leader, with a gain of 1.64%. In addition, WTI crude oil lost 2.66%, reaching $86.43 per barrel.

Furthermore, the U.S. 10-Year Treasury yield increased to 3.26%, an increase of more than six basis points. Similarly, the Two-Year Treasury yield also increased, as it hovers around 3.52%. This brings the spread between them to -26 basis points. The negative spread indicates that investors still have fears of a recession.

The Atlanta Federal Reserve updated its GDPNow reading, which allows it to estimate GDP growth in real-time. Currently, it estimates that the economy will see an annualized expansion of 2.59% in the third quarter after experiencing two consecutive quarters of decline.

This is up from the previous reading of 1.57%. The “nowcast” becomes more accurate as more economic data is released throughout the quarter. Therefore, it will be interesting to see how the estimate changes, going forward. In the previous quarter, the estimate started off positive and eventually ended up correctly estimating a GDP decline by the end of Q2.

Because of this, investors should invest carefully, as we are not in the clear just yet.

ISM Manufacturing Data Comes in Better Than Expected

Last Updated 3:00PM EST

Stock indices are mixed heading into the final hour of today’s trading session. As of 3:00 p.m. EST, the Dow Jones Industrial Average is up 0.1%, while the S&P 500 and the Nasdaq 100 are down 0.2% and 0.7%, respectively.

The energy sector is the laggard so far, as it is down 2.2%. Conversely, the utilities sector is the session’s leader, with a gain of 1.4%.

On Thursday, The Institute for Supply Management released its monthly report for the ISM Manufacturing Purchasing Managers Index, which measures the month-over-month change in production levels. A number over 50 represents an expansion, whereas anything below 50 means a contraction. The report came in at 52.8, better than the expected 52.

It’s worth noting that this indicator is flat compared to last month’s reading but has been slowly downtrending ever since its peak in April 2021, when it hit a high of 64.7. If this trend continues, it might not take long before production levels begin to contract.

Furthermore, the ISM Manufacturing Employment report posted a reading of 54.2, meaning that manufacturing employment went into expansion after contracting for three straight months. This could be the start of a new expansionary trend or just a temporary boost.

Initial Jobless Claims Come in Better Than Expected

Last Updated 12:05PM EST

Stock indices are in the red halfway into today’s trading session. As of 12:05 p.m. EST, the Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 are down 0.4%, 1%, and 1.9%, respectively.

On Thursday, the Department of Labor released its Initial Jobless Claims report, which came in better than expected. In the past week, 232,000 people filed for unemployment insurance for the first time. Expectations were for 248,000 individuals.

When using the four-week average, initial jobless claims were 241,500, down from last week’s reading of 245,500. It’s worth noting that this figure has been in an overall uptrend 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 1.438 million, in line with the forecast but higher than last week’s 1.412 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 on an overall uptrend 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 in the Red to Start Thursday’s Trading Session

Last Updated 10:00AM EST

Stock indices are in the red 30 minutes into today’s trading session. As of 10:00 a.m. EST, the Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 are down 0.6%, 0.9%, and 1.2%, respectively.

The energy sector (XLE) is the laggard so far, as it is down 3.4%. Conversely, the utilities sector (XLU) is the session’s leader, with a gain of 0.3%.

WTI crude oil remains below $90 per barrel as China expands COVID-19 lockdowns. In addition, supply may be on the rise as U.S. crude oil output is also on the rise. As a result, the price is hovering around the low-$87 per barrel range.

Meanwhile, bond yields are higher, as the U.S. 10-Year Treasury yield is now hovering around 3.27%. This represents an increase of more than seven basis points from the previous close.

Similar movements can be seen with the Two-Year yield, which is now at 3.51%. However, the spread between the 10-Year and Two-Year U.S. Treasury yields is still negative, as it currently sits at -24 basis points.

Pre-Market Update

U.S. stock futures dipped early Thursday morning as investors prepared to begin September with renewed fears of near-term economic health after closing August in the red.

Futures on the Dow Jones Industrial Average (DJIA) inched 0.52% lower, while those on the S&P 500 (SPX) lost 0.71%, as of 4.20 a.m. EST, Thursday. Meanwhile, the Nasdaq 100 (NDX) futures dipped 1.04%.

On Wednesday, the S&P 500, the Dow, and the Nasdaq 100 closed 0.78%, 0.88%, and 0.57%, respectively.

During the course of August, the three indexes lost 4.2%, 4.1%, and 5.2%, respectively. Meanwhile, oil prices also posted the third consecutive month of losses, indicating that recession fears are overpowering concerns of crude supply shortages.

Interest Rates Might Reach Record Highs

The Federal Reserve’s firm decision to keep raising interest rates to bring prices under control, and, to that end, its willingness to risk a recession, wreaked havoc in the market in the last few days of August.

With the current benchmark interest rate between 2.25% and 2.50% and the Fed’s target inflation rate at around 2%, it seems too early for a pivot in the central bank’s offensive against inflation.

On Wednesday, Cleveland Federal Reserve President Loretta Mester confirmed this by saying that the Fed is unlikely to pull back interest rates before they cross 4%. This level of interest rates has not been seen since the financial crisis of 2008.

Chipmakers Gear Up for More Pain

Another pain point was added to the list of economic woes on Wednesday, after Nvidia (NVDA) announced that the U.S. government has imposed restrictions on selling chips to China and Russia. The semiconductor major’s shares tanked more than 6% in the early morning trading Thursday after it said that the sales of its A100 and H100 GPUs will be adversely affected, causing a revenue loss of about $400 million in the ongoing quarter.

Nvidia peers Advanced Micro Devices (AMD) is also said to have received new licensing requirements for chip sales to China and Russia. However, AMD does not believe the new terms to be meaningfully detrimental to its revenues yet.

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