2023-08-04 16:07:51 ET
Wall Street's major indices finished the trading week on a negative tone after it erased an earlier market rally. Moreover, the latest jobs report signaled that the stubbornly tight labor market may be losing some steam, while Amazon's ( AMZN ) stellar earnings report offset Apple's ( AAPL ) decline.
The Nasdaq Composite ( COMP.IND ) finished lower by 0.3% , while the S&P 500 ( SP500 ) gave back 0.5% , and the Dow ( DJI ) fell by 0.4% .
“All four of the equity indices today closed down. Nothing dramatic, just a selloff towards the end of the day. During the week the market shrugged off a ratings cut for US sovereign debt, so we suspect it will survive a muted outlook from Apple too. Our house view on each of the indices suggests a little more downside in the near term before another push up towards all time highs later in the year," Seeking Alpha contributor Cestrian Capital stted.
Nonfarm payrolls in July added 187K jobs, fewer than the 200K expected, indicating a continued slowdown in job gains . But average hourly earnings growth stayed steady, rising 0.4% M/M, ahead of the 0.3% expected. On a Y/Y basis, AHE gained 4.4% Y/Y, compared with 4.2% consensus.
"The employment report came fairly close to expectations and is by no means a scene changer," said 2V Research's Gerard MacDonell. "It is consistent with a labor market that is gradually slowing, if not necessarily cooling much, in a lagged response to the earlier weakness of aggregate demand growth."
While the Federal Reserve wants to see a slower pace of job creation, it doesn't want to see wages remaining elevated. MacDonell said the wages data tilts marginally hawkish. "Wage growth appears to be stabilizing at a somewhat too high pace."
Rates also finished lower. The 10-year Treasury yield ( US10Y ) came down 14 basis points to 4.05% and the 2-year yield ( US2Y ) fell 11 basis points to 4.78%. Although the 2s10s curve "remains deeply inverted, this is the least inverted since May," said Deutsche Bank's Jim Reid.
On an earnings front, Amazon ( AMZN ) and Booking Holdings ( BKNG ) finished higher after both companies posted strong results.
Amazon ( AMZN ) surged 8.2% as its results were bolstered by cost optimization efforts. "The quarter was impressive, with AWS revenue trends stabilizing and retail gaining operating efficiency," said Mizuho's James Lee.
On the other hand, Apple ( AAPL ) finished lower by 4.8% after it provided conservative forecast , raising concerns of continued sales pressure. J.P. Morgan said even though investors may "fret" at the hint of modestly weaker-than-expected guidance, it does not change Apple's ( AAPL ) overall trajectory.
Nine out of the 11 S&P sectors closed in the red, which were led by Information Tech and Utilities.
Additionally, cybersecurity stocks were dragged lower by Fortinet ( FTNT ), which plunged 25% after an alarming guidance cut .
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Dow, S&P, and Nasdaq closed lower, erasing an earlier market rally