Stocks On Shaky Ground As Traders Tread Lightly Ahead of Friday's Jobs Data: What's Driving Markets Thursday?

Risk aversion returned on Thursday as stocks retraced their gains from Wednesday. Traders are now closely monitoring the eagerly anticipated non-farm payrolls data set to be unveiled by the Bureau of Labor Statistics on Friday.

By midday trading in New York, not a single S&P 500 sector registered gains, underscoring the overall prevailing weak sentiment in the market. Treasury yields exhibited relatively low volatility, and the U.S. dollar experienced a marginal decline.

On Thursday, two Federal Reserve speakers shared their insights. San Francisco Fed President Mary Daly said the market’s expectations for interest rate hikes in both November and December seem reasonable, emphasizing the importance of not prematurely declaring victory against inflation.

Richmond Fed President Thomas Barkin commented that interest rates may appear elevated at the moment, but he believes they are not excessively high in the long-term perspective.

Cues From Thursday's Trading:

The S&P 500 fell 0.6%, while the Nasdaq 100 slipped 0.8%. Blue-chip stocks were 0.5%, same as small caps in the Russell 2000.

US Index Performance On Wednesday

Analyst Color:

The U.S. economy is facing an odd situation of the dollar and crude oil surging in tandem as opposed to the inverse relation they typically share, and this could have a widespread impact across economies, industries and consumers, said Morgan Stanley’s Lisa Shalett.

U.S. exporters and multinationals could take a big hit from the development, the analyst said. Higher oil prices increase the costs of companies and a stronger dollar makes their products less competitive in the global markets. Higher oil prices also mean pain at the pump, eating into the discretionary spending of consumers, she said.

These dynamics have the potential to challenge corporate profits at a time analysts have been boosting their U.S. corporate earnings forecasts, Shalett said. Morgan Stanley now anticipates 12% annualized growth through 2025, she added.

“Higher expectations, in the face of mounting risks, may amplify the degree of potential disappointment and related market volatility,” the analyst said.

Thursday Trading In Major US Equity ETFs

• The SPDR S&P 500 ETF Trust SPY was 0.6% lower to $422.05.
• The SPDR Dow Jones Industrial Average ETF DIA fell 0.44% $329.47.
• The Invesco QQQ Trust QQQ fell 0.9% to $356, according to Benzinga Pro data.

Looking at S&P 500 sector ETFs:

• The Materials Select Sector SPDR Fund XLB was the laggard, down 1.8%.
• Other underperformers included the Consumer Staples Select Sector SPDR Fund XLP, down 1.7%, and the Materials Select Sector SPDR Fund XLB, down 1.8%.

See Also: How To Trade Futures

Stocks In Focus:

• Lamb Weston Holdings Inc. LW rose over 9% after a strong earnings report.
• The Clorox Company CLX fell over 7% on a cyberattack hit.
• Rivian Automotive, Inc. RIVN slumped about 19% after the electric vehicle startup announced a $1.5-billion green bond offering. Luxury-EV maker Lucid Group Inc. LCID fell 8%.
• Conagra Brands, Inc. CAG, and Constellation Brands, Inc. STZ fell 1.5% and 3.5%, respectively, in reaction to earnings.
• Levi Strauss & Co. LEVI will report earnings after the market close.

Commodities, Bonds, Other Global Equity Markets:

Crude oil fell 2.4%, with a barrel of WTI-grade crude trading at $81. The United States Oil Fund ETF USO was 2.3% lower to $73.86.  

Treasury yields were mixed, with the 10-year yield down by 2 basis points to 4.71% and the 30-year yield up by 2 basis points to 4.88%. The iShares 20+ Year Treasury Bond ETF TLT was 0.3% lower for the day. 

The dollar eased, with the U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF UUP, down 0.3%. The EUR/USD pair, which is tracked by the Invesco CurrecyShares Euro Currency Trust FXE, was 0.3% higher to 1.0535.

European equity indices closed the session on a mixed fashion. The SPDR DJ Euro STOXX 50 ETF  FEZ was flat. 

Gold edged 0.2% down to $1,817/oz, while silver fell 0.6% to $20.86. Bitcoin BTC/USD was 1.4% lower to $27,410.

Staff writer Piero Cingari updated this report midday Thursday. 

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