Disappointing jobs report brings pre-market volatility …
The latest report on the employment situation showed weak employment growth. Many investors are looking at the report to try to guess what the Fed will do with regard to the cut. Persistent wage inflation could pose a problem. Stock futures are volatile as the bulls try to follow the recent hat trick. A rally in copper futures seems to be helping the materials sector.
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(Friday Market Open) Investors were in hold mode before the jobs report, and then volatility hit. Non-farm employment growth was expected to be around 500,000, but the number was only 194,000. This shows how difficult it has been to predict job growth during the pandemic. Difficulty finding daycare centers, the delta variant, and additional unemployment benefits helped keep workers at home.
Significant job losses were observed in education while the participation rate fell in the sector. Travel and leisure have failed to create more jobs. The average hourly wage increased as expected on longer working hours than expected. Higher wages fail to attract workers into the job market, which could be of concern as wage inflation may be more rigid than the Fed wants.
Many economists and central bankers predicted that September would be the time when many workers returned to the workforce. Returning to work could go a long way in opening up the supply chain. If the supply chain opens up, the Fed may feel more comfortable reducing its stimulus.
You’re here (TSLA) isn’t waiting for the Fed to take action, at the company’s investor conference it announced plans to move its headquarters from Silicon Valley, California to Austin, Texas. Tesla cited the availability of land and a more growth-friendly environment as the reasons for his move. However, the company plans to maintain and even expand its operations in California.
After closing on Thursday, Quidel (QDEL) rose nearly 9% on news that the company is ramping up production of its rapid COVID-19 tests due to shortages nationwide. The company also released preliminary revenue for its fiscal third quarter. The company is seeing an increase in professional and over-the-counter demand and was awarded a 12-month contract worth $ 284 million.
Hitting the ceiling
Shares extended the recent rally to a third day with news that a temporary debt ceiling deal could be reached. The deal was later confirmed when Senate Majority Leader Chuck Schumer announced he had reached a deal with Senate Minority Leader Mitch McConnell for a short-term extension. Investors greeted the development with a buying frenzy. However, the frenzy fizzled out as the S&P 500 (SPX) closed well on its high of the day.
The volatility has also been felt in oil prices. President Putin’s news on Wednesday that Russia is helping meet Europe’s energy needs sparked a massive sell-off of Crude oil (/ CL). Oil was still down Thursday morning but recovered to close up 1.1% on the day. Bond investors did not appear to buy the sale of oil because the 10-year Treasury yield (TNX) climbed on the open and gradually traded higher throughout the day.
While the energy stocks traded higher with the rally in oil and financial stocks traded higher with yields, this was the Materials ($ IXB) sector that led Thursday’s rally. Consumer discretionary ($ IXY) and Health care ($ IXV) completed the first three sectors. Utilities ($ IXU) was the only sector in the red.
Basic Girl Materials: Despite the leadership of the materials industry, there was no news directly related to Freeport-McMoRan (FCX). According to Trefis, 77.1% of the company’s mining operations are copper. Copper futures (/ HG) was up 2.54% from its 200-day moving average. It hit a new high in May, but has since pulled back and consolidated. Investors can anticipate a rebound in copper that could make mining more profitable for FCX.
Many investors see rising copper prices as a good economic signal. Unlike gold and silver, which are often used as a hedge against inflation and / or bear markets, copper is used in the manufacture of components, especially electronics and wiring. Therefore, rising copper prices could signal an increase in manufacturing, which means more orders to meet rising consumption.
You missed the turn: Investors may have crossed paths with their sons because Ford (F) was among the top performers on the S&P 500 on Thursday. General Motors (GM) held an analyst meeting on Wednesday, and You’re here (TSLA) held its famous investor conference on Thursday. Still, Ford has caught the attention of investors.
Ford rallied around the market but also received a boost on news that Tata Engines (TTM) would take over Ford’s automotive manufacturing plant in India in Chennai. While the news gave Ford a boost, it appeared to turbocharger Tata as the stock climbed more than 15% to a new 52-week high.
Auction: eBay (EBAY) was also among the top performers on the S&P 500, but had no company specific news. The rally of more than 4% of the stock came after bouncing off its 100-day moving average and surpassing its 50-day moving average. With supply lines blocked, investors may be thinking holiday shoppers could turn to online auctions for their freebies.
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