Closing Summary: S&P 500 Settles Below 100-Day Moving Average

The stock market ended the Thursday session on a lower note despite showing strength in the early going. The S&P 500 fell 0.6% with eight sectors registering losses. 

 

Equities climbed out of the gate after the European Central Bank reaffirmed its commitment to the current policy course. In addition, better than expected earnings and economic data also factored into an upbeat start. 

 

Despite the set of positive factors, the S&P 500 could not overtake its opening high at 1928.97. Instead, the index spent about an hour near that level before retreating into the red. An afternoon report from the New York Times concerning potential U.S. airstrikes on militants in Iraq contributed to keeping dip-buyers sidelined. 

 

As a result, the S&P 500 ended the session below its 100-day moving average (1913/1914), while the Dow Jones Industrial Average (-0.5%) settled just above its 200-day moving average (16343) after crossing that level for the first time since February 6. 

 

The health care sector (-1.2%) ended at the bottom of the leader board amid weakness in biotechnology. The iShares Nasdaq Biotechnology ETF (IBB 248.15, -3.67) lost 1.5% after being rejected by its 50-day moving average (251.88). 

 

Other counter cyclical sectors like consumer staples (-0.8%) and telecom services (-1.0%) also under performed, while the utilities sector (+1.1%) displayed relative strength to narrow its week-to-date loss to 2.0%. 

 

Meanwhile, all six cyclical groups posted losses with the materials space (-0.9%) having the worst showing. Similarly, the other commodity-related sector--energy (-0.7%)--also finished near the bottom of the leader board. 

 

Elsewhere, the technology sector (-0.5%) ended just ahead of the S&P 500, but that was a bit misleading as the relative strength in two influential components--Apple (AAPL 94.48, -0.01) and Microsoft (MSFT 43.23, +0.49)--kept the sector from registering additional losses. Chip makers, however, lagged broadly with the PHLX Semiconductor Index sliding 1.4%. 

 

Also of note, the industrial sector ended little changed after showing relative weakness yesterday. Two heavily-weighted components, Boeing (BA 119.84, +1.50) and General Electric (GE 25.50, +0.06), contributed to the out performance, while the broader PHLX Defense Index shed 0.1%. Transport stocks displayed strength during the session, but the Dow Jones Transportation Average (-0.2%) slipped into the red during afternoon action. 

 

The retreat in equities boosted the Treasury market, where the 10-yr note added half a point to lower its yield six basis points to 2.41%. This represented the lowest close for the benchmark yield since June 2013. The safe-haven demand was also visible in the foreign exchange market, where the yen jumped and pressured the dollar/yen pair into the 102.00 area. 

 

Participation was below average with fewer than 660 million shares changing hands at the NYSE. 

 

Economic data was limited to weekly initial claims and the Consumer Credit report for June: 

Initial claims declined to 289,000 from 303,000, while the Briefing.com consensus expected a reading of 308,000 

Even though claims have held below the 300,000 mark over the past four weeks that has not translated into payroll growth in the neighborhood of 300,000 jobs per month, which had been the case in the past 

Since the relationship hasn't held up, it appears the data has been skewed by seasonal adjustments or monthly volatility in the payroll data. If payroll volatility is the issue, we should see a surge in the August jobs report 

Consumer credit increased by $17.30 billion in June, which was higher than the Briefing.com consensus estimate of $15.80 billion 

The prior month's credit growth was left unrevised at $19.60 billion 

Tomorrow, productivity (Briefing.com consensus 1.4%) and unit labor costs (consensus 2.0%) data for the second quarter will be released at 8:30 ET, while the Wholesale Inventories report for June (consensus 0.4%) will be reported at 10:00 ET. 

S&P 500 +3.3% YTD 

Nasdaq Composite +3.8% YTD 

Dow Jones Industrial Average -1.3% YTD 

Russell 2000 -3.8% YTD

 

08:30	USD		Nonfarm Productivity (QoQ)		1.5%	-3.2%
08:30	USD		Unit Labor Costs (QoQ)		1.4%	5.7%
10:00	USD		Wholesale Inventories (MoM)		0.6%	0.5%
10:30	USD		ECRI Weekly Annualized (WoW)			4.1%