It was a choppy day of trading on Thursday as investors looked ahead to the market's next big catalyst: the July jobs report, which will be released tomorrow morning.
"The labor market is an extremely critical input in the debate around inflation and how many Fed rate hikes are needed to 'whip it' that has been driving markets," says Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management Company.
In tomorrow's report, "investors will be looking for evidence that the pace of job gains is slowing to a more sustainable pace and/or that more Americans are returning to the labor market," he says. Schutte adds that wage data is another important metric to watch, particularly to see if average hourly earnings start to moderate – something that is needed in order for inflation to push lower.
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Today's weekly jobless claims data gave us a glimpse into the state of the labor market, with initial unemployment claims climbing by 6,000 to 260,000 in the final week of July.
"With the jobs report coming tomorrow, today's slight uptick in jobless claims isn't likely to be a major market nor Fed mover," says Mike Loewengart, managing director of investment strategy at E*Trade. "Remember that while jobless claims have been slowly rising, the labor market remains robust."
The market certainly didn't have much of a reaction to today's numbers. The Nasdaq Composite rose a modest 0.4% to 12,720, as shares of Latin American e-commerce concern MercadoLibre (MELI, +16.2%) soared on a solid Q2 earnings report. The S&P 500 Index slipped 0.1% to 4,151, and the Dow Jones Industrial Average shed 0.3% to 32,726, as Walmart (WMT) fell 3.7% on news the mega-retailer is cutting 200 corporate positions.
Other news in the stock market today:
- The small-cap Russell 2000 gave back 0.2% to end at 1,906.
- U.S. crude futures slumped 2.3% to $88.54 per barrel, their lowest settlement since Feb. 2.
- Gold futures rose 1.7% to finish at $1,806.90 an ounce.
- Bitcoin fell 4.3% to $22,455.60. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.)
- The Bank of England (BOE) this morning raised its interest rates by 50 basis points (a basis point is one-one hundredth of a percetage point), the biggest increase since 1995. However, the central bank's "commentary was more concerning with expectations for a 'long recession,' and expectations for inflation to climb much higher before it begins to pull back," says Quincy Krosby, chief global strategist for independent broker-dealer LPL Financial. "The market is now expecting a series of rate hikes as the BOE launches an aggressive campaign to curtail an entrenched inflationary backdrop. Moreover, the BOE move in rates, coupled with its downcast commentary, comes amid a political vacuum."
- Coinbase Global (COIN) jumped 10.0% after the cryptocurrency exchange said it is partnering with BlackRock (BLK, +0.8%) to make bitcoin available to the asset manager's institutional investors. "This is much needed positive news for crypto traders and should provide some optimism for the longer-term health of the cryptoverse," says Edward Moya, senior market strategist at currency data provider OANDA.
- Crocs (CROX) plunged 10.7% after the plastic shoemaker reported earnings. In its second quarter, CROX brought in adjusted earnings of $3.24 per share on revenue of $964.6 million, more than analysts were expecting. However, the company lowered its full-year sales forecast. Still, CFRA Research analyst Zachary Warring maintained a Strong Buy rating on CROX. "We see tons of upside in CROX and expect strong cash flow from both brands allowing them to pay down debt significantly," the analyst says.
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