Stock market news today: Stocks wobble as Fed delivers and Meta jumps
08/01/2024 21:36
Strong Meta results are keeping bullish tech hopes aloft after the Fed cemented bets on a September rate cut.
US stocks wavered on Thursday, as upbeat Meta (META) results put earnings center stage again after the Federal Reserve boosted hopes for a September rate cut.
The S&P 500 (^GSPC) fell below the flatline while the tech-heavy Nasdaq Composite (^IXIC) erased earlier gains, after the indexes closed with hefty gains. The Dow Jones Industrial Average (^DJI) fell 0.3%.
On Thursday, the 10-year Treasury (^TNX) yield moved below the 4% level for the first time since February, hovering near 3.98%
Stocks initially moved higher after Fed chair Jerome Powell bolstered the market's confidence in a September interest-rate cut, saying it "could be on the table." Traders mostly expect a 25-basis-point reduction, but bumped up bets on a 50-basis-point move after policymakers held rates steady.
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 Meta's strong report late Wednesday. Shares in the Facebook owner climbed over 8% as the market appraised its earnings beat and signs that solid digital ad revenue will give its AI investments time to pay off.
Earnings from Apple (AAPL) and Amazon (AMZN) due after the bell could test the Meta-driven bullishness for techs. They will also test the chances the AI trade can deliver on its promise, which took a hit from earlier disappointing "Magnificent Seven" earnings.
Weekly jobless claims rose to an 11-month high, data out early Thursday showed. The print will pave the way for Friday's release of the July jobs report, watched closely for further evidence of the cooling labor market crucial to Fed policy.
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10 Year Treasury yield moves below 4% for first time since February
On Thursday, the 10-year Treasury (^TNX) yield moved below the 4% level to hover near 3.98% for the first time since February.
The move comes a day after Fed chair Jerome Powell said a September rate cut was "on the table".
US Manufacturing enters deeper contraction
The US manufacturing sector sank further into contraction territory during July.
The ISM's manufacturing PMI registered a reading of 46.8 in July, down from June reading of 48.5 and lower than the 48.5 economists expected, according to Bloomberg data. The reading was the lowest reading 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 show an unwillingness to invest in capital and inventory due to current federal monetary policy and other conditions," Chair of het Institute for Supply Management Timothy Fiore said in a release.
Stocks open higher after Fed decision, Meta jumps 8%
Stocks opened higher on Thursday to build on the prior session's rally after the Federal Reserve laid the groundwork for a September rate cut and Facebook parent Meta (META) reported better than expected results.
The S&P 500 (^GSPC) climbed 0.4%, while the tech-heavy Nasdaq Composite (^IXIC) gained almost 0.5%. The Dow Jones Industrial Average (^DJI) edged up 0.4%.
Stocks rose after Fed chair Jerome Powell said on Wednesday that a September interest-rate cut "could be on the table."
Meta shares rose about 8% after a strong quarterly report from the social media giant. Like other Big Tech firms, Meta said it expects "significant" capital-expenditure growth in 2025 as it builds out its AI-focused infrastructure.
Jobless claims rise more than expected
Weekly jobless claims once again rose more than expected last week in the latest sign of a cooling labor market.
New data from the Department of Labor showed 249,000 initial jobless claims were filed in the week ending July 27, up from 235,000 the week prior and above the 235,000 economists had expected. This marked the highest level of weekly filings since August 2023.
Meanwhile, the number of continuing applications for unemployment benefits once again hit its highest level since November 2021, with 1.877 million claims filed in the week ending July 20, up from 1.84 million the week prior.
"The claims data of the past few weeks have been signaling incremental labor market weakness, albeit from a position of strength," Jefferies US economist Thomas Simons wrote in a note on Thursday. "This is another step in the process of the labor market coming into better balance, but we must remain vigilant in watching for signs of slack. We are particularly concerned about a negative impulse in the labor market data, but things can deteriorate quickly once they start."
