Stock Market

U.S. stocks edge lower as investors await Friday jobs report

U.S. stocks edged lower Thursday, losing ground as investors weighed another round of corporate earnings and looked ahead to a key reading on jobs.

What’s happening
  • The Dow Jones Industrial Average
    DJIA,
    -0.27%

    was down 47 points, or 0.1%, at 32,765.

  • The S&P 500
    SPX,
    -0.24%

    shed 3 points, or 0.1%, to trade at 4,152.

  • The Nasdaq Composite
    COMP,
    -0.28%

    was up 3 points, or less than 0.1%, at 12,670.

Stocks bounded back sharply Wednesday after back-to-back losses. The Dow jumped 416.33 points, or 1.3%, while the S&P 500 rose 1.6% and the Nasdaq Composite jumped 2.6%.

What’s driving the market

Stocks were drifting lower after data showed first-time claims for U.S. jobless benefits rose by 6,000 to 260,000 in the week ended July 30. Investors were seen largely looking past Thursday’s data ahead of the July employment report due Friday.

“With the jobs report coming tomorrow, today’s slight uptick in jobless claims isn’t likely to be a major market nor Fed mover. Investors will be waiting to see if the labor market can withstand the Fed’s rate-hike campaign as well as it did in June,” said Mike Loewengart, managing director for investment strategy at E-Trade from Morgan Stanley, in emailed comments.

“Remember that while jobless claims have been slowly rising, the labor market remains robust,” he wrote.

Employment gains in July are expected to drop to 258,000 from 372,000 in the prior month, a poll of economists by The Wall Street Journal estimates. If so, it would mark the smallest increase since December 2021.

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See: Hiring slowdown? U.S. seen adding just 258,000 jobs in July

Stocks were lifted Wednesday by data that showed resilience in the services sector and strong factory orders.

Federal Reserve officials have continued to warn that achieving a so-called soft landing for the economy as they raise interest rates to battle inflation will be difficult. Market participants expect that the prospect of an economic slowdown will lead the Fed to slow interest rate hikes, with fed-funds futures markets pricing in rate cuts in 2023.

“It’s worth noting that stock markets rallied on the signs of stronger-than-expected growth. This is significant because recently they’ve been rallying on signs of weaker growth, which would mean that the Fed was likely to stop hiking rates and start cutting early on,” said Marshall Gittler, head of investment research at BDSwiss Holding Ltd., in a note.

“So stock markets rise when growth looks strong and rise when growth looks weak. Who said markets are consistent?” he wrote.

Investors continue to wade through a flood of corporate earnings reports. Shares of drug maker Eli Lilly & Co.
LLY,
-2.64%

fell 1.9% after reporting second-quarter results that came in below Wall Street’s forecast.

Investors continue to weigh whether a bounce that has seen the S&P 500 rise more than 13% off its 2022 low set in June will continue or will prove to be another bear-market bounce. Some analysts have seen encouraging signs in the form of broader participation in the rally by individual stocks.

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Read: Why the U.S. stock rally looks more like a new bull market than a bear bounce to these analysts

“Looking back at July, we started the month with the fear that a lot of bad things could happen—but what we actually saw was a rebound. As we move forward into August, many of those fears appear to already be priced in, while others do not look nearly as bad as they did a couple of months ago,” Brad McMillan, chief investment officer for Commonwealth Financial Network, wrote in a note.

“July’s rebound was the markets taking stock of the fears versus the reality. And while risks remain, it looks like August could provide even more evidence that things are looking up,” he said.

Companies in focus
  • Shares of Lucid Group Inc. LCID fell 10.8% after the electric-vehicle maker late Wednesday announced a reduction in its production forecast. Lucid said it now expects its 2022 production volume to hit 6,000 to 7,000 vehicles, after stating 12,000 to 14,000 vehicles in May.

  • Nikola Corp.
    NKLA,
    +4.12%

    shares rose 7% after the electric vehicle maker reported a narrower-than-expected loss and revenue that beat forecast, and reiterated its target for Tre BEV truck deliveries.

  • American depositary receipts of Alibaba Group Holding Ltd.
    BABA,
    +1.21%

    rose 1.3% after the Chinese e-commerce company topped expectations with its latest financials and indicated that business trends improved as the June quarter wore on.

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Other assets
  • The yield on the 10-year Treasury note
    TMUBMUSD10Y,
    2.682%

    fell 8 basis points to 2.671%. Yields and debt prices move opposite each other.

  • The ICE U.S. Dollar Index
    DXY,
    -0.57%
    ,
    a measure of the currency against a basket of six major rivals, fell 0.3%.

  • Oil futures fell, with the U.S. benchmark
    CL.1,
    -2.37%

    down 1.7% to trade below $90 a barrel. Gold futures
    GC00,
    +1.58%

    rose 1.4% trade near $1,802 an ounce.

  • Bitcoin
    BTCUSD,
    -2.05%

    edged up 0.3% to $22,900.

  • The Stoxx Europe 600
    SXXP,
    +0.02%

    and London’s FTSE 100
    UKX,
    +0.00%

    each rose 0.1%.

  • The Shanghai Composite
    SHCOMP,
    +0.80%

    ended 0.8% higher, while the Hang Seng Index
    HSI,
    +2.06%

    jumped 2.1% in Hong Kong and Japan’s Nikkei 225
    NIK,
    +0.69%

    advanced 0.7%.

Hear from Carl Icahn at the Best New Ideas in Money Festival on Sept. 21 and Sept. 22 in New York. The legendary investor will reveal his view on this year’s wild market ride.

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