Wall Street stocks moved lower Thursday, coming off a day of gains amid a bond rout reprieve, with the focus now turning to Friday’s key labor market data.
In midday trading, the Dow Jones Industrial Average (^DJI) slipped 0.4% after breaking a three-day losing streak on Wednesday as the major stock indexes recovered from a sell-off. The S&P 500 (^GSPC) was down 0.5%, while the tech-heavy Nasdaq Composite (^IXIC) lost 0.6%.
A pullback in bond yields’ blistering rally has brought some relief to battered stocks, and the 10-year Treasury yield (^TNX) was slightly lower after losing hold of 16-year highs the previous session.
Data showed US weekly jobless claims ticked higher last week but undershot economists’ expectations. They held near-historic lows, a sign of resilience in the labor market in the face of Fed rate hikes.
It’s another data point ahead of Friday’s jobs report for September, after weaker-than-expected ADP private-sector hiring data provided another sign the labor market is cooling. That could prompt the Fed to think twice about raising borrowing costs again, lifting some pressure on markets.
Read more: What the Fed rate-hike pause means for bank accounts, CDs, loans, and credit cards
But some analysts believe the monthly report could be bad for stocks, whether the print is cool or hot, given the recent surge in bond yields.
Meanwhile, oil prices continued to retreat on Thursday, amid concerns that a global economic slowdown will hit demand. WTI crude oil futures (CL=F) fell 1.8% to below $83, having fallen by the most since last September the previous day. Brent crude futures (BZ=F) were down 1.9%, just above $84 after breaking below the key level Wednesday for the first time since late August.
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JMortgage rates creep closer to 8%
Mortgage rates are still chugging higher as fears about 8% rates are swirling. One economist says that would take a further tick higher in the 10-year Treasury yield.
Gabriella Cruz-Martinez reports:
Mortgage rates jumped again this week — remaining at a 23-year high and increasing the likelihood that rates could soon hit 8%.
The rate on the average 30-year fixed mortgage increased to 7.49% from 7.31% the previous week, according to Freddie Mac, following the yield of the 10-year Treasury, which spiked to a 16-year high this week. Rates are at their highest point since December 2000 for a second week in a row, with few signs of softening.
Steeper rates continue to smother homebuyer demand, forcing the price-conscious to the sidelines. Meanwhile, those still on the hunt leaned on lower-rate options, eager to lock in before rates surge higher.
“At the beginning of the year, it was widely expected that mortgage rates would fall to around 6% by the end of 2023. However, now the question is whether rates will hit 8% this year,” Lisa Sturtevant, chief economist at Bright MLS, a real estate data provider, said in an emailed statement. “The gap between the yield on the 10-year Treasury and the rate on a 30-year fixed rate mortgage has been around 3 percentage points, so as the Treasury yield approaches 5%, an 8% mortgage rate does not seem unlikely.”
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Stocks lower in afternoon trade
Stocks are lower on Thursday as investor focus shifts to a highly anticipated September jobs report due out on Friday.
The Dow Jones Industrial Average (^DJI) was down about 0.4% while the S&P 500 (^GSPC) and he tech-heavy Nasdaq Composite (^IXIC) dropped roughly 0.5%.
After a surge in oil prices and bond yields had weighed on stocks in recent days, both were trading lower on Thursday.
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Friday’s jobs report could be bad for stocks no matter what it reveals
Stocks are lower on Thursday as investors eagerly await the September jobs report on Friday morning. But with the Fed’s rate hike path in focus, the details of that report could spook investors.
Yahoo Finance’s Jared Blikre explains:
Friday’s monthly jobs report from the Bureau of Labor could be a catalyzing event after Wednesday’s employment report from ADP materially missed expectations.
If the data comes in hot, Peccatiello said, investors would likely chase yields higher until they finally become a chokepoint in the markets. A 5% yield really “starts to become a real burden for risk assets,” said Peccatiello.
On the other hand, if the headline payroll number comes in weak (much less negative), the weakening labor market could signal a recession is near, which would also send stocks and rates down.
Peccatiello acknowledged the irony of the situation, saying: “Too hot a number [or] too cold a number — it’s bad for stocks.”
A “just right” Goldilocks report merely kicks the can to the next potential catalyst.
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Jobless claims signal ‘very few layoffs’ in US economy
Initial jobless claims for the week ending September 30 were 207,000, slightly below expectations for 210,000.
Claims have largely been in a range of about 200,000 to 250,000 over the past year. Economists believe the limited pickup off the 52-week lows for claims shows that while the labor market be starting to cool, that hasn’t mean widespread job loss for American workers.
“There are still very few layoffs,” Oxford economics lead US economist Michael Pearce wrote in a research note Thursday. “We expect some increase in claims over the coming months as job growth slows further but, for now, labor market conditions are still easing without a significant rise in unemployment.”
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Stocks roughly flat at open as markets await Jobs report
Stocks are in the red at the market open on Thursday as investor focus shifts to a highly anticipated September jobs report due out on Friday.
The Dow Jones Industrial Average (^DJI) and the S&P 500 (^GSPC) were roughly flat at the open on Thursday, while the tech-heavy Nasdaq Composite (^IXIC) dropped about 0.1%.
Meanwhile, after reaching 16-year highs on Tuesday, 10-year (^TNX) and 30-year Treasury yields (^TYX) were roughly flat on Thursday. The 10-year yield sat at 4.74% after rising above 4.8% on Tuesday.
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Rivian, Clorox, and BlackBerry: Stocks trending in premarket trading
Here are some of the stocks leading Yahoo Finance’s trending tickers page in premarket trading on Thursday:
Rivian (RIVN): The stock fell 8% after the previous day’s rally. The EV startup said it will offer $1.5 billion worth of convertible debt.
Clorox (CLX): Clorox shares fell by 4%. The cleaning products company said on Wednesday it expects to post a first-quarter loss after a cyberattack in August.
BlackBerry (BB): Shares were up 3% premarket. The group said on Wednesday it would separate its Internet of Things (IoT) and cybersecurity business units and target a subsidiary IPO for the IoT business next fiscal year.
Alstom (ALO.PA): Alstom’s shares plunged 36%. The French train maker gave a cash flow warning on Thursday.
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KStock futures slip as market braces for US jobs report
Wall Street’s major stock indexes were poised for losses on Thursday, as a retreat in the blistering bond yield rally gave space for attention to turn to Friday’s US monthly payrolls data.
Futures on the S&P 500 (^GSPC) fell 0.19%, while those on the Dow Jones Industrial Average (^DJI) dropped 0.23%, or 77 points. Contracts on the tech-heavy Nasdaq 100 shed 0.11%.
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