Stocks climbed on Thursday in anticipation of a strong employment report on Friday. The SPX set another new record led by energy and industrial shares. SPX is now up 20% this year, 40% from its September low last year and had not dropped by 5% or more since last November. Historically, when the SPX has climbed by 20% through August, the remainder of the year has dropped by 2%. The DOW and Nasdaq also gained with Nasdaq setting another record. The employment figure will influence the Fed on what it will be doing with regards to asset purchases and the fed funds rate which will determine interest rates. The number of jobs will provide some light on the effect the Delta variant is having on the economy and consumer spending.
Initial jobless claims fell by 14,000 to 340,000 last week, the lowest level since the start of the pandemic. The four week moving average also dropped to a pandemic low of 355,000. The average value in 2019 before the pandemic was 218,000 weekly. This unemployment figure, which is a proxy for layoffs, shows that employers have been keeping employees despite worry about the effects of the Delta variant infection rate. Continuing claims, a marker for the number of people receiving jobless benefits from states, also dropped by 160,000 to 2.75 million which is the lowest since March 2020. Claims for all programs were 12.2 million.
The US trade deficit in July decreased 4.3% to 70.1 billion as imports dropped and exports rose. The estimate was 70.9 billion with the July value being 75.7 billion.
Productivity for the second quarter was revised down to 2.1% from the previous report of 2.3%. The estimate was 2.4%. Productivity growth was 4.3% in the first quarter. Hours worked increased by 6.0% while unit labor costs grew by 1.3% after declining 2.8% in the first quarter. Hourly compensation was up 3.4% compared with 1.4% for the first three months of the year.
Factory orders increased 0.4% in July, above the 0.3% estimate, and compared with 1.5% in June. Orders were up 18.0% on an annual basis. Primary metals and machinery were leaders while transportation fell. The revised estimate for non-defense capital goods excluding aircraft was up 0.1% instead of unchanged.
Economic news for September 3.
Nonfarm payrolls August: estimate 720,000, previous 943,000
Unemployment rate August: estimate 5.2%, previous 5.4%
Average hourly earnings August: estimate 0.3%, previous 0.4%
Markit PMI services for August: estimate 55.3, previous 55.2
ISM services for August: estimate 61.6%, previous 64.1%.
The SP 500 is up by 0.28% to close at 4536.95. The index is up 1.50% over five days, up 2.43% over one month, up 8.21% over three months and up 31.31% over one year.
The trailing P/E is 31.26 compared to 36.19 one year ago and estimated future P/E 22.26. Dividend yield is currently 1.31 compared with 1.75 one year ago.
Leading stocks were PWR up 12.06%, COG up 6.70%, OXY up 5.98%, BAX up 4.84% and CTLT up 4.29%.
Trailing stocks were ADSK down 5.20%, HRL down 4.60%, GPS down 2.91%, V down 2.58% and GPN down 2.41%.
The Dow Jones industrial Average is up by 0.37% to close at 35443.82. The DOW is up 0.66% over five days, up 1.08% over one month, up 2.51% over three months and up 25.28% over one year.
The trailing P/E is 24.09 compared with 27.78 year ago and an estimated future P/E of 19.26. The current dividend yield is 1.82% compared with 2.20 one year ago.
Leading stocks were WBA up 2.96%, CVX up 2.09%, CAT up 1.84%, UNH up 1.52% and HD down 1.27%.
Trailing stocks were V down 2.58%, CRM down 1.55%, AXP down 1.45%, DIS down 0.88%, and NKE down 0.54%.
The NASDAQ composite is up by 0.14% and closed at 15331.18. NASDAQ is up 2.58% over five days, up 2.93% over one month, up 12.61% over 3 months and up 33.80% over one year.
Leading stocks were AGILW up 69.40%, ANY up 41.78%, DTST up 29.59%, NMTC up 22.97% and TLSA up 21.21%.
Trailing stocks were METX down 57.18%, UNAM down 17.39%, ASMB down 16.15%, BBIG down 15.18%, and EFTR down 15.01%.
The MidCap SP400 is up by 0.49% to close at 2773.83. The SP400 is up 2.10% for the past 5 days, up 2.50% for the past month, up 2.17% for the past 3 months and up 45.54% over the past year.
Leading stocks were up SMTC 10.92%, PDCO up 6.61% and XEC up 5.81%.
Trailing stocks were FIVE down 13.01%, TCBI down 10.30% and AEO down 10.15%
The SmallCap SP600 is up by 0.49% to close at 1377.99. The SP600 is up 3.15% for the past 5 days, up 2.80% for the past month, down 0.24% for the past 3 months and up 53.76% over the past year.
Leading stocks were BNED up 13.32%, LPI up 9.05% and HCC up 7.66%.
Trailing stocks were GCO down 8.25%, BLFS down 7.67% and MEI down 7.62%.
The CBOE VIX is up 1.86% and closed at 16.41. The VIX is down 12.90% over five days, down 5.03% over one month, down 9.04% over three months and down 51.16% over one year.
On the New York stock exchange 2132 stocks advanced and 1125 declined, while on Nasdaq 2736 advanced and 1616 declined.
There were 251 new 52 week highs and 18 new 52 week lows on NYSE with 248 new highs and 39 new lows on NASDAQ.
The 2 year Treasury note yield is 0.212% and 10 year is 1.289%. The 10 year yield is down 2.5% over five days, down 1.4% over one month, down 26.5% three months ago, and up 56.8% one year ago.
SP500 Sector Performance % change
Health Care +1.08
Consumer Staples +0.36
Real Estate +0.44
Information Technology -0.05
Consumer Discretionary -0.07
Communication Services -0.70
Energy has been up 1.68% over five days, down 1.33% over one month, down 11.53% over three months and up 40.07% over one year.
Communication Services has been up 2.46% over five days, up 4.02% over one month, up 12.19% over three months and up 37.31% over one year.