Market Update: Thursday, August 3, 2017

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Yesterday’s Market Activity

  • Stocks little changed, small caps fell. Generally good earnings releases kept in check by mixed ADP employment report. Dow (+0.2%) closed above 22k for first time, S&P 500 Index (+0.1%), Nasdaq (flat), Russell 2000 (-1.1%).
  • Sectors were mixed. Tech (+0.5%) lead on Apple leadership following its Q2 earnings release. Telecom (-1.3%) lead to the downside.
  • Commodities – WTI crude oil +0.9% to $49.51/bbl., COMEX gold -0.1% to $1273/oz., industrial metals mixed.
  • Treasuries little changed, with benchmark 10-year yield +1 basis point (+0.01%) to 2.26%.
  • Dollar up slightly vs. major currencies; Weaker vs. euro, stronger vs. yen.

Overnight & This Morning

  • U.S. stocks little changed in early trading.
  • Asian equities closed broadly lower overnight; Nikkei, Hang Seng (-0.3%), Shanghai Composite (-0.4%).
  • European markets mixed in late afternoon, STOXX Europe 600 +0.1%.
  • U.K. FTSE trades higher by 0.8%, following Bank of England’s (BOE) decision to leave interest rates, asset purchase program unchanged. BOE also lowered 2017 gross domestic product forecast.
  • Commodities – WTI crude oil (-0.2%) to $49.50/bbl., gold, copper both lower by 0.3%.
  • 10-year Treasury yield -3 basis points (0.03%) at 2.25%, dollar index near flat.

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Macro Notes

  • Employment report preview. The Bureau of Labor Statistics releases its monthly Employment Situation Report tomorrow at 8:30 a.m. ET. Consensus expectations are that the economy added 180,000 jobs in July after solid growth of 220,000 jobs in June. Market participants will be watching wages closely, with consensus expectations for average hourly earnings growth of 0.3% in July following 0.2% growth in June. Modest acceleration would likely be welcome by the market as a sign of economic strength with limited added concern about inflationary pressures.
  • What Does a T-bill Inversion Mean for Markets? An inverted yield curve, as measured by the difference between short- and long-term Treasury yields, has historically been a reliable indicator of recession. But an inversion in the short-end of the yield curve (known as Treasury bills or T-bills), like the one we saw recently, is more common, and we believe that in this case was driven by fears of a debt ceiling debate instead of economic worries. We review the history of T-bill inversions later today on the LPL Research blog.

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Click Here for our detailed Weekly Economic Calendar

Thursday

  • Markit Services PMI (Jul)
  • ISM Non-Mfg. (Jul)
  • Durable Goods Orders (Jun)
  • Capital Goods Shipments & Orders (Jun)
  • Germany: Retail Sales (Jun)
  • Italy: Markit Services PMI (Jul)
  • France: Markit Services PMI (Jul)
  • Germany: Markit Services PMI (Jul)
  • Eurozone: Markit Services PMI (Jul)
  • UK: Markit Services PMI (Jul)
  • Eurozone: Retail Sales (Jun)

Friday

 

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