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Stocks wobble as Fed delivers and Meta bounces
U.S. stocks were mixed on Thursday, as optimism from Meta (GOAL) results put earnings in the spotlight again after the Federal Reserve raised hopes for a September rate cut.
The S&P 500 (^GSPC) fell below the flat line, while the tech-heavy Nasdaq Composite (^IXIC) erased earlier gains, after the indices closed with substantial gains. The Dow Jones Industrial Average (^DJI) fell 0.6%.
On Thursday, the 10-year Treasury (^TNX) yield fell below the 4% level for the first time since February, hovering near 3.98%
Shares initially rose after Fed Chairman Jerome Powell Reinforced market confidence in a September interest rate cut, saying it “could be on the table.” Traders are mostly expecting a 25 basis point reduction, but increased bets in a 50 basis point move after policymakers rates kept stable.
Read more: 32 Charts That Tell the Story of Markets and the Economy Right Now
The focus is now on quarterly results, especially from Big Tech names, after Strong Meta Report Wednesday night. Shares of the Facebook parent rose more than 8% as the market weighed its earnings and signs that solid digital ad revenue will give its AI investments time to pay off.
Earnings from Apple (AAPL) It is Amazonas (AMZN) due after the bell could test the Meta-driven rally for technologies. They will also test the chances of AI trading delivering on its promise, which was hit by the earlier disappointing earnings of the “Magnificent Seven.”
Weekly unemployment benefit claims rose to an 11-month highdata released Thursday showed. The print will pave the way for the release of the July jobs report on Friday, which will be closely watched for further evidence of a cooling labor market that is crucial to Fed policy.
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- Thu, 1 Aug 2024 at 16:26 GMT+2
10-year Treasury yield falls below 4% for first time since February
On Thursday, the 10-year Treasury (^TNX) yield fell below the 4% level to hover near 3.98% for the first time since February.
The move comes a day after Fed Chairman Jerome Powell said a September rate cut was “on the table.”
US industry enters deepest contraction
The U.S. manufacturing sector sank further into contraction territory in July.
The ISM Manufacturing PMI posted a reading of 46.8 in July, down from June’s reading of 48.5 and lower than the 48.5 expected by economists, according to Bloomberg data. The reading was the lowest since November 2023.
Readings above 50 for this index indicate an expansion in activity, while readings below 50 indicate contraction.
“Demand remains subdued as companies demonstrate reluctance to invest in capital and inventory due to current federal monetary policy and other conditions,” said Timothy Fiore, president of the Institute for Supply Management. said in a statement.
Stocks open higher after Fed decision, Meta jumps 8%
Stocks opened higher on Thursday, building on the previous session’s rebound after the Federal Reserve set the stage for a September rate cut and Facebook parent company Meta (GOAL) reported better than expected results.
The S&P 500 (^GSPC) rose 0.4%, while the Nasdaq Composite (^IXIC) gained nearly 0.5%. The Dow Jones Industrial Average (^DJI) rose 0.4%.
Stocks rose after Fed Chairman Jerome Powell said on Wednesday that an interest rate cut in September “could be on the table.”
Meta shares rose about 8% after a strong quarterly report of the social media giant. Like other Big Tech companies, Meta said it expects “significant” growth in capital expenditures in 2025 as it builds out its AI-focused infrastructure.
Jobless claims rise more than expected
Weekly unemployment benefit claims again rose more than expected last week in the latest sign of a cooling job market.
New data from Department of Labor showed that 249,000 initial jobless claims were filed in the week ending July 27, up from 235,000 the previous week and above the 235,000 that economists had expected. That marked the highest level of weekly filings since August 2023.
Meanwhile, the number of ongoing unemployment benefit claims has reached a new high its highest level since November 2021with 1.877 million claims registered in the week ending July 20, up from 1.84 million the previous week.
“The claims data over the past few weeks have signaled incremental labor market weakness, albeit from a position of strength,” Jefferies US economist Thomas Simons wrote in a note Thursday. “This is another step in the process of the labor market coming into better balance, but we should remain vigilant for signs of slack. We are particularly concerned about a negative momentum in the labor market data, but things can deteriorate quickly once they start.”
