Stocks fell on Thursday as Wall Street awaited the key jobs report and analyzed a slew of economic data ahead of it. Meanwhile, the possibility of an Israeli retaliatory attack against Iranian oil facilities sent oil prices rising for a third day.
The S&P 500 (^GSPC) fell about 0.2%, while the Dow Jones Industrial Average (^DJI) fell about 0.4%. The high-tech Nasdaq Composite (^IXIC) finished just below the flat line.
Some calm has returned to the market, which was rocked by escalating tensions in the Middle East, which led to sharp rises in oil prices. Israel has not yet released its promise to respond to the Iranian missile attack on Tuesday, amid efforts by Western and regional leaders to stabilize the situation.
But the worsening crisis helped push oil prices higher for a third day. Brent (BZ=F) and West Texas Intermediate (CL=F) futures rose more than 5% following President Biden's comments on the possibility of an Israeli retaliatory attack on Iranian oil facilities.
Read more: What a Fed rate cut means for bank accounts, CDs, loans and credit cards
In the US, investors are preparing for the highly anticipated September jobs report due on Friday after a surprise rise in private payrolls came alongside signs that the labor market is softening.
The market received more signs of a general slowdown in the labor market on Thursday. Weekly unemployment claims rose slightly from the previous week. Meanwhile, planned layoffs in the US have fallen from a five-month high, according to a report from Challenger, Gray and Christmas. But the company's vice president said the data showed the labor market is at an “inflection point.”
Any new signs of deterioration in the labor market could prompt the Fed to follow up on last month's 0.5% interest rate cut with another massive move, despite policymakers' expectations of a 0.25% cut in November.
On the corporate front, Tesla ( TSLA ) stock continued to fall in the wake of downbeat delivery numbers, with Reuters reporting that the electric car maker halted US online orders for its cheapest Model 3. Shares fell more than 3% on Thursday.
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Stocks close lower as monthly jobs data is released, and oil rises 5% amid escalating tensions between Israel and Iran
Stocks closed lower on Thursday as investors awaited Friday's monthly jobs report for clues about the health of the labor market while monitoring conflict in the Middle East after oil prices rose during the session.
The S&P 500 (^GSPC) fell about 0.2%. The Dow Jones Industrial Average (^DJI) fell 0.4%, while the tech-heavy Nasdaq Composite (^IXIC) fell just below the flat line.
Energy stocks (XLE) rose as oil prices rose on fears of supply disruption due to an expected Israeli retaliatory strike against Iran. President Biden's comments about a possible attack on Iranian oil facilities helped push crude oil prices higher.
On Friday morning, investors will get a new reading of the state of the labor market with the release of the monthly jobs report. As Josh Schaeffer reports, the data is expected to serve as the latest evidence that the labor market has slowed in 2024 but is not weakening quickly at a pace that would prompt a larger rate cut from the Federal Reserve in November.
Payrolls for 2024 are trending in pre-pandemic direction
The September jobs report is scheduled for release at 8:30 a.m. ET as investors ponder how quickly the labor market will slow.
Keith Lerner, Truist's co-chief investment officer, shared a chart in a note to clients Wednesday evening that helps set the stage for Friday's report. Lerner notes that average monthly job additions for 2024 are roughly in line with the pace seen before the pandemic.
He notes that this comparison shows that the labor market is “cold but not yet soft.” This is a sentiment shared by some economists recently as well.
With another 150,000 jobs expected to be added in September, Friday's report is unlikely to focus on the number of people hired. It is likely again to do with the number of people who have not found work. The unemployment rate is expected to remain steady at 4.2%. If it rises unexpectedly, talk of a bigger Fed rate cut in November could intensify.
Average mortgage interest rates are 6.12%
Yahoo Finance's Claire Boston reports:
Mortgage rates rose slightly this week, reflecting a jump in Treasury yields that serve as a benchmark.
The average interest rate on a 30-year mortgage rose to 6.12% as of Thursday, up from a two-year low of 6.08% the week before, according to bank data. Freddie Mac data. The average fifteen-year mortgage was 5.25%, up from 5.16% in the same period last week.
The increase comes as 10-year Treasury yields, which mortgage interest rates closely track, have risen as investors assess the health of the economy and rising tensions in the Middle East.
Read more here.
Tesla stock falls by more than 4%
Shares of Tesla (TSLA) fell more than 4% on Thursday, weighing on the consumer discretionary sector (XLY).
The electric car giant fell to session lows after Bloomberg reported that employees were informed that the company's chief information officer would leave the company days before Tesla's robotaxi was unveiled in California. Nagesh Saldi reports directly to CEO Elon Musk.
Walmart, Target and Nike are among the retailers affected if the port strike continues beyond this week
Yahoo Finance's Brooke De Palma reports:
With East and Gulf Coast ports remaining closed for the first time in five decades, retailers are bracing for the potential impact.
If the port strike continues beyond this week, retailer margins, inventory and sales could start to feel the effects.
“It's Walmart, it's Target, it's Amazon… Costco, all the big companies that are multi-product retailers. Those are the ones that will have an impact,” Joe Feldman of Telsey Advisory Group told Yahoo Finance.
Amazon ( AMZN ) shares fell more than 1% on Thursday amid an overall market decline.
Read more here.
Port strike could cost US economy up to $4.5 billion per day, impact GDP growth: analysts
Laura Bratton from Yahoo Finance reports:
An ongoing strike by dock workers in the United States could cost the economy up to $4.5 billion per day Half a percentage point of US GDP For the fourth quarter, analysts say.
About 45,000 members of the International Longshoremen's Association went on strike Tuesday, temporarily closing 36 ports from Maine to Texas.
The U.S. imports most affected are construction materials, European wines, and fruits from Latin America — most of which come through East Coast ports, according to data compiled by Jason Miller, a professor of supply chain management at Michigan State University.
Read more here.
September Jobs Report: Job growth is expected to rise as the unemployment rate remains steady
Josh Schiffer of Yahoo Finance says:
The September jobs report is expected to be the latest evidence that the labor market has slowed in 2024 but is not weakening quickly at a pace that would prompt a larger rate cut from the Federal Reserve in November.
The monthly report, scheduled for release at 8:30 a.m. EDT on Friday, is expected to show nonfarm payrolls rose by 150,000 in September while the unemployment rate remained steady at 4.2%, according to consensus estimates compiled by Bloomberg.
The main question heading into Friday's release is whether the data will reflect a significant slowdown in the labor market, which could lead to another large interest rate cut by the Fed.
Read more here.
Energy, utilities and technology stocks rose while the rest of the sectors fell
Energy stocks (XLE) outperformed broader markets on Thursday as oil prices rose on fears of supply disruptions caused by conflict in the Middle East.
The S&P 500 Utilities Index (XLU) also rose slightly.
The technology sector (XLK) is hovering above the flat line thanks to a rise in Nvidia (NVDA) shares.
Shares of the AI chip giant rose after CEO Jensen Huang told CNBC that demand for the company's next-generation Blackwell chips is “insane.”
Sector movements on Thursday
Oil rises by about 4% amid fears of supply disruption
Oil prices rose for the third straight session on Thursday amid fears of supply disruption due to conflict in the Middle East.
West Texas Intermediate (CL=F) futures rose more than 4%, while Brent crude futures (BZ=F), the international benchmark, advanced about 4% amid expectations that Israel will retaliate against Iran after Tehran's ballistic missile strike on Tuesday.
“Futures remain in a nervous trade” over the possibility that Israeli retaliation could hit oil facilities in Iran, Dennis Kessler, senior vice president of trading at Korea Bank Financial, wrote in a note Thursday.
Concerns about potential outages through the Strait of Hormuz, a corridor for oil shipments, also pushed prices higher.
Nvidia stock rose 4%, helping the Nasdaq climb into the green
Shares of Nvidia (NVDA) rose more than 4% Thursday morning, helping lift the Nasdaq Composite Index (^IXIC).
The tech-heavy index erased early morning losses to climb into the green as heavyweight artificial intelligence chipmakers and other semiconductor stocks rose.
Stocks opened lower with the release of the monthly jobs report and rising tensions in the Middle East
Stocks opened lower on Thursday as investors turned attention this week to monthly jobs data for clues about the health of the economy while closely monitoring the conflict in the Middle East.
The S&P 500 (^GSPC) fell 0.3%. The Dow Jones Industrial Average (^DJI) fell 0.3%, while the Nasdaq Composite (^IXIC) fell 0.5% after all three averages closed above the flat line on Wednesday.
Investors are awaiting the expected September jobs report, which will be released on Friday morning. Weekly unemployment claims released Thursday rose slightly from the previous week.
In commodities, oil prices rose on Thursday as the Israeli-Iranian crisis raised fears of supply disruptions in the region. Brent (BZ=F) and West Texas Intermediate (CL=F) crude oil rose more than 2% in early trading.
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