The Week In Review
The stock market ended the week on an upbeat note despite stumbling at the start. The S&P 500 turned a 30-point loss into a 28-point gain to end higher by 1.4% while the Nasdaq Composite (+1.7%) outperformed. For the week, the S&P 500 jumped 1.0% while the Nasdaq added 0.5%.
The opening dive occurred after the release of the Nonfarm Payrolls report for September, which disappointed on all fronts. According to the report, only 142,000 jobs were added, which was a far cry from the Briefing.com consensus, which expected a reading of 205,000. Adding insult to injury, the prior month's job growth was revised down to 136,000 from 173,000 and hourly earnings showed no growth.
In sum, the weak nature of the report caused the market to reconsider its rate-hike expectations. Bond traders were quick to show their doubt about the likelihood of a rate hike before 2016, evidenced by a surge in Treasuries. The 10-yr note jumped more than a point immediately after the report, narrowing its gain to 16 ticks by the close with the 10-yr yield falling five basis points to 1.98%.
Elsewhere, the Dollar Index (95.93, -0.25) dropped to late September levels in the morning, but erased more than half of its decline by the close, ending lower by 0.3%. Most notably, the dollar/yen pair dove below the 119.00 mark in the morning, but returned above 119.00 around 10:30 ET and continued climbing into the afternoon. The pair ticked above 120.00 during the final hour of action, which is a level that has been in focus throughout the week. The 120.00 level will deserve attention going into next week considering dips below that mark have been congruent with a risk-off attitude while rallies north of 120.00 have coincided with strength in equities.
Nine of ten sectors ended in the green with energy (+4.0%) finishing well ahead of other groups. The sector received a boost from crude oil, which climbed 1.8% to $45.55/bbl. Thanks to today's spike, the energy sector gained 2.8% for the week while only two other groups—health care and materials—added more than 2.0% since last Friday.
Although the energy sector was a clear standout, the outperformance in the health care sector (+2.1%) was more notable since biotechnology powered that move. The iShares Nasdaq Biotechnology ETF (IBB 315.40, +10.44) spiked 3.4%, ending the week higher by 1.7% after being down almost 8.0% at its lowest point on Monday.
Biotechnology's outperformance helped the Nasdaq finish in the lead while large cap technology listings like Apple (AAPL 110.38, +0.80), Google (GOOGL 656.99, +14.99) also contributed to the Nasdaq's strength. For its part, the technology sector gained 1.5%.
On the downside, the financial sector narrowed its loss to 0.1% after showing a 2.0%+ decline in the early going in response to the disappointing jobs report.
Today's participation was well above average with more than a billion shares changing hands at the NYSE floor.
Economic data included Nonfarm Payrolls and Factory Orders:
Nonfarm payrolls increased by 142,000 while the Briefing.com consensus expected a reading of 205,000
August nonfarm payrolls revised to 136,000 from 173,000
July nonfarm payrolls revised to 223,000 from 245,000
Private sector payrolls increased by 118,000 (Briefing.com consensus 200,000)
August private sector payrolls revised to 100,000 from 140,000
July private sector payrolls revised to 195,000 from 224,000
Unemployment rate held at 5.1%, which is what the consensus expected
The U6 unemployment rate, which accounts for the total unemployed plus persons marginally attached to the labor force and the underemployed, slipped to 10.0% from 10.3% in August
Average hourly earnings were unchanged (Briefing.com consensus 0.2%) after an upwardly revised 0.4% increase (from 0.3%) in August
The labor force participation rate ticked down to 62.4% from 62.6%
Factory orders declined 1.7% in August after increasing a downwardly revised 0.2% (from 0.4%) while the Briefing.com consensus expected a 1.0% drop
That was the largest decline since a 3.7% drop was registered in December 2014
The weakness in the manufacturing sector comes as a strong dollar has curtailed export demand and low oil prices have reduced demand for drilling equipment
Monday's data will be limited to the 10:00 ET release of the ISM Services report for September.
Nasdaq Composite -0.6% YTD
S&P 500 -5.2% YTD
Dow Jones Industrial Average -7.6% YTD
Russell 2000 -7.5% YTD
Week in Review: Volatile Action Continues
The trading week got off to a very poor start for the major indices, which experienced steady selling pressure from the opening bell in a trend-down day. The S&P 500 lost 2.6%. Global growth concerns were at the heart of Monday's pullback along with another dastardly performance by the biotechnology sector. The growth concerns were triggered anew by a caustic research note on the business prospects for commodity producer Glencore (GLCNF 1.07, -0.41), an 8.8% year-over-year decline in China's industrial profits, a disappointing 1.4% monthly decline in pending U.S. home sales for August, and a declaration from International Monetary Fund (IMF) head Christine Lagarde that the IMF's forecasts for global growth of 3.3% this year and 3.8% next year are no longer realistic due principally to the weakness in emerging markets.
The market ended Tuesday on an uninspiring note after surrendering the bulk of its intraday gain. The S&P 500 (+0.1%) added two points after showing an eight-point gain during the opening hour. Equity indices rallied at the start, but the rebound from Monday's 2.6% dive in the S&P 500 hit resistance right beneath the 1,900 level, at which point most sectors began backing away from their morning highs. The health care sector (+0.9%) held the lead throughout the day, but the influential group also retreated from its high as market-wide selling pressure grew heavier during the afternoon.
The stock market ended the midweek session on a higher note, but could not avoid its second consecutive monthly decline. The S&P 500 gained 1.9% on Wednesday, but surrendered 2.7% in September. The tech-heavy Nasdaq Composite (+2.3%) outperformed, but lost 3.3% for the month. The Wednesday session also marked the end of the third quarter, during which the S&P 500 fell 6.9% versus a 7.4% decline in the Nasdaq. The end of Q3 meant that quarter-end positioning and portfolio rebalancing likely played a part in the advance. Equity indices began the trading day with solid gains after index futures rallied alongside markets in Europe. The S&P 500 built on its opening spike, notching a session high just before 10:30 ET; however, that move was followed by a pullback into the middle of the day's trading range, which occurred alongside rally in the yen that briefly dropped the dollar/yen pair below the 120.00 level. The short-lived swoon in the dollar/yen pair was followed by a rebound into the 120.00 area while stocks climbed to new highs.
Thursday ended on a modestly higher note after the key indices climbed off their intraday lows. The S&P 500 (+0.20%) settled within four points of its unchanged level while the Dow and Nasdaq settled not far behind. Equities began the first session of Q4 just above their flat lines after a pre-market retreat caused S&P 500 futures to surrender a 25-point gain. The early morning slide from pre-market highs gathered steam following a Bloomberg report indicating the Bank of Japan does not plan to introduce additional stimulus at this time. In addition to pressuring stocks, the report gave a boost to the yen, sending the dollar/yen pair to a session low near 119.50; however, the currency pair was able to claw its way back into the 120.00 range in the afternoon while stocks also climbed off their lows.