Markets: News  

Despite two of the main indices closing with modest losses, the stock market showed resilience to selling today on the heels of the hotter-than-expected July employment report. There was a selloff around midday before the main indices climbed off their lows and moved sideways to the close. The S&P 500 was up 0.4% week-to-date; the Nasdaq was up 2.2% week-to-date; the Dow Jones Industrial Average was down 0.1% week-to-date.The real downside drag were the lagging mega caps and growth stocks. The Vanguard Mega Cap Growth ETF (MGK) closed down 0.8% versus a 0.1% gain in the Invesco S&P 500 Equal Weight ETF (RSP). The Russell 3000 Growth Index closed with a 0.2% loss versus a 0.2% gain in the Russell 3000 Value Index. Small and mid cap stocks were exempt from this pressure with the Russell 2000 (+0.8%) and S&P Mid Cap 400 (+0.6%) closing ahead of the three main indices. S&P 500 sector performance was not exempt from mega cap downside pressure, however. Consumer discretionary (-1.7%), communication services (-0.9%), and information technology (-0.2%) were among the laggards today thanks to their top components, Tesla (TSLA 864.51, -61.39, -6.6%), Meta Platforms (META 167.11, -3.46, -2.0%), and Microsoft (MSFT 282.91, -0.74, -0.3%) underperforming.Earnings news also affected sector performance. Disappointing quarterly results from Warner Bros. Discovery (WBD 14.59, -2.89, -16.5%) and Western Digital (WDC 47.09, -2.82, -5.7%) dragged down communication services and information technology, respectively. Meanwhile, favorable earnings results from EOG Resources (EOG 107.01, +7.19, +7.2%) helped propel the energy sector (+2.0%) to the top of the leaderboard today. This sector was also boosted by rising oil prices. WTI crude oil futures rose 0.3% to $88.73/bbl. Unleaded gasoline futures rose 2.8% to $2.87/gal. While the hot July jobs report didn't have an outsized effect on the stock market, Treasury yields rose sharply after the release. The 2-yr note yield, which sat at 3.05% before the report, rose 19 basis points to settle at 3.23%. The 10-yr note yield, which was at 2.70% before the report, rose 16 basis points to settle at 2.84%. Notably, Treasury yields made big upside moves on the week with the 2-yr yield rising 33 basis points week-to-date and the 10-yr yield rose 20 basis points week-to-date.There is no U.S. economic data of note on Monday. Reviewing today's economic data:July Nonfarm Payrolls 528K (Briefing.com consensus 250K); Prior was revised to 398K from 372K; July Nonfarm Private Payrolls 471K (Briefing.com consensus 200K); Prior was revised to 404K from 381K; July Avg. Hourly Earnings 0.5% (Briefing.com consensus 0.3%); Prior was revised to 0.4% from 0.3%; July Unemployment Rate 3.5% (Briefing.com consensus 3.6%); Prior 3.6%; July Average Workweek 34.6 (Briefing.com consensus 34.5); Prior was revised to 34.6 from 34.5The key takeaway from the report is that it squashes the friendly notion that the Fed can turn friendly with its monetary policy decisions sooner rather than later. There is a lot of ground to cover still before we get to 2023, but if a tight labor market is seen by Fed Chair Powell as a risk factor for perpetuating wage-based inflation pressures, the July employment report didn't change that perspective.Consumer credit increased by $40.1 bln in June after increasing by a revised $23.8 bln (from $22.4 bln) in May.Dow Jones Industrial Average: -9.7% YTD
S&P 400: -11.9% YTD
S&P 500: -13.0% YTD
Russell 2000: -14.4% YTD
Nasdaq Composite: -19.1% YTD