Economic Events and Earnings for September 5
Published: Thu, 09/04/14
Closing Summary: Stocks Slip While ECB Cuts Again
The stock market ended the Thursday session on a modestly lower note following a daylong retreat from the opening high. The S&P 500 shed 0.2%, while the Russell 2000 (-0.4%) finished behind the benchmark index.
Overnight, the Bank of Japan and the Bank of England made no changes to their policy stances, while the European Central Bank announced a rate cut. The ECB lowered its main refinance rate to 0.05% from 0.15%, cut its deposit facility rate to -0.2% from -0.1%, and cut the marginal lending rate to 0.3% from 0.4%. In addition to the cuts, the central bank announced the deployment of an asset-backed securities purchase program, but it was revealed that the decision was not unanimous.
The policy move pressured the euro, sending the single currency to its lowest level since July of last year. Prior to the announcement, the euro traded at 1.3130 versus the dollar, but fell below the 1.2950 level. In turn, the US Dollar Index jumped 1.1% to its best close in nearly 14 months.
Generally speaking, cyclical sectors held up better than the defensively-oriented groups. The consumer discretionary sector (+0.4%) jumped into the lead shortly after the open and remained in that position until the close. Homebuilders contributed to the strength with Hovnanian (HOV 4.25, +0.05) climbing 1.2% in reaction to better than expected quarterly results. The iShares Dow Jones US Home Construction ETF (ITB 23.68, +0.18) gained 0.8%.
Retail stocks also served up a measure of support with the SPDR S&P Retail ETF (XRT 89.39, +0.52) adding 0.6%. Apparel retailer PVH (PVH 128.42, +11.29) surged 9.6% after beating earnings estimates and lowering its revenue guidance.
Meanwhile, the remaining growth-oriented sectors posted modest losses, but energy tumbled 1.3% amid a 1.0% decline in crude oil prices ($94.58). The sector was pressured by shares of BP (BP 44.89, -2.82), which tumbled 5.9% after a federal judge found the company grossly negligent in causing the oil spill in the Gulf of Mexico in 2010.
On the countercyclical side, the consumer staples sector (+0.2%) was the lone advancer with Costco's (COST 125.15, +3.80) strong same store sales for August providing a measure of support. On the flip side, telecom services (-0.2%) and utilities (unch) spent the bulk of the session in the red, while health care (-0.5%) slumped in the afternoon. Biotechnology fueled the retreat with the iShares Nasdaq Biotechnology ETF (IBB 270.92, -4.54) sliding 1.7%.
Despite the afternoon retreat among equities, Treasuries ended the day on their lows with the 10-yr yield up five basis points at 2.45%.
Participation was ahead of recent averages with more than 613 million shares changing hands at the NYSE.
Economic data included initial claims, ADP Employment Change, Q2 Unit Labor Costs/Productivity, trade balance, and the August ISM Services Index:
The initial claims level increased to 302,000 from an unrevised 298,000, while the Briefing.com consensus expected an increase to 300,000
Today's ADP National Employment Report revealed that employment in the nonfarm private business sector rose 204K in August, which was below the increase of 220K expected by the Briefing.com consensus
The July reading was revised down to 212,000 from 218,000
The U.S. trade deficit narrowed slightly in July to $40.50 billion, which was the smallest trade deficit since January, from a downwardly revised $40.80 billion (from $41.50 billion) in June, while the Briefing.com consensus expected an increase to $42.00 billion
The goods deficit fell $200 million to $60.20 billion in July from $60.40 billion in June
The services surplus was unchanged at $19.60 billion
Nonfarm labor productivity in Q2 2014 was revised down to 2.3% in the second estimate from 2.5% in the advance estimate, while the consensus expected a revision up to 2.6%
A relatively large downward revision to hourly compensation (2.3% from 3.1%) led to a quarterly decline in unit labor costs (-0.1% from +0.6%), which represented the fourth decline out of the last six quarters
The ISM Non-manufacturing Index for August increased to 59.6 from 58.7, while the Briefing.com consensus expected a drop to 57.8
That was the strongest reading of the Index since it was redone in January 2008
Per the old methodology, the index is at its highest level since reaching 61.4 in August 2005
Tomorrow, the Nonfarm Payrolls report for August (Briefing.com consensus 223,000) will be released at 8:30 ET.
Nasdaq Composite +9.2% YTD
S&P 500 +8.1% YTD
Dow Jones Industrial Average +3.0% YTD
Russell 2000 +0.3% YTD
Economic Events
| Time | Cur. | Imp. | Event | Actual | Forecast | Previous | |
|---|---|---|---|---|---|---|---|
| Friday, September 5 | |||||||
| 08:30 | USD | Average Hourly Earnings (MoM) | 0.2% | ||||
| 08:30 | USD | Average Weekly Hours | 34.5 | 34.5 | |||
| 08:30 | USD | Nonfarm Payrolls | 225K | 209K | |||
| 08:30 | USD | Private Nonfarm Payrolls | 206K | 198K | |||
| 08:30 | USD | Unemployment Rate | 6.1% | 6.2% | |||
| 10:30 | USD | ECRI Weekly Annualized (WoW) | 2.3% | ||||
Earnings Reports for Friday September 5th
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