Stocks opened lower Thursday as investors continued to fret about a rare downgrade to the U.S. credit rating. However, markets turned higher mid-morning amid a busy batch of economic data and earnings reports.
One of the more notable headlines to emerge from today's jam-packed economic calendar was that worker productivity increased 3.7% in the second quarter, while unit labor costs rose at their slowest annual pace since 2021.
"Labor productivity, while still weaker than in previous cycles, recovered during the second quarter of the year and has continued to push down unit labor costs," says Eugenio Alemán, chief economist at Raymond James. This is good news for the Fed, the economist adds, as it "weakens the argument that labor costs are a threat to the disinflationary process going forward."
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
In other econ news, ahead of tomorrow's key July jobs report, data from the Labor Department showed that initial jobless claims rose by just 6,000 last week to 221,000. The figures reveal a resilient labor market, and it's likely tomorrow's payrolls data will show more of the same.
"Job growth tends to remain strong in July when the labor market is tight – reflecting strong hiring of youth summer workers – and three of the alternative measures of employment growth we track indicate a strong pace of job growth," says Jan Hatzius, chief economist at Goldman Sachs.
PayPal, Qualcomm stocks sink after earnings
As for today's earnings reports, PayPal Holdings (PYPL) fell 12.3% after the fintech firm disclosed its second-quarter results. While PayPal beat on both the top and bottom lines, its adjusted operating margin of 21.4% fell short of company guidance.
Still, Argus Research analyst Stephen Biggar maintained a Buy rating on the financial stock. "We expect PayPal to benefit over time from secular trends that have boosted growth for credit card processors, such as the increasing use of digital payments over checks and cash for both convenience and security," Biggar says. Additionally, the analyst expects PYPL to expand its market share as "the company leverages its platforms globally and takes advantage of its strong brand recognition and rapid growth in merchant acceptance."
Qualcomm (QCOM) was another stock that declined despite reporting higher-than-expected earnings and revenue. The semiconductor stock fell 8.2% after Akash Palkhiwala, chief financial officer of Qualcomm, said on the earnings call that revenue growth in its upcoming fiscal year "will largely depend on macroeconomic environment, global handset units and [a slower] China recovery."
Energy stocks pop on Saudi Arabia news
Energy was the best-performing sector today, jumping 1.0% as U.S. crude futures climbed 2.6% to $81.55 per barrel. Saudi Press Agency – a state-owned media outlet – said Saudi Arabia plans to extend voluntary oil production cuts through September. BP (BP, +1.2%) and Exxon Mobil (XOM, +1.7%) were two of the day's best energy stocks.
As for the major indexes, the Nasdaq Composite finished down 0.1% at 13,959, while the S&P 500 (-0.3% at 4,501) and the Dow Jones Industrial Average (-0.2% at 35,215) also closed with modest losses.
On deck are Apple (AAPL) and Amazon.com (AMZN) earnings. In after-hours trading, AAPL is up 0.7% ahead of its fiscal third-quarter results. And AMZN stock is trading up 6.9% after its second-quarter beat.
Related Content
-
Americans Are Retiring Later: Will This Trend Last?Given a host of pressures to keep working, Americans are retiring later in life. Will regulatory and economic forces encourage you to work longer?
-
Trump’s Tax Cut Risks Your SNAP, Medicaid BenefitsTax Cuts The GOP budget blueprint could slash lifesaving programs for millions of U.S. households.
-
Stock Market Today: Dow Drops 971 Points as Powell Pressure Ramps UpPresident Trump is increasing his attacks against Jerome Powell, insisting the Fed chair cut interest rates.
-
Wall Street Is Worried About Apple Stock. Should You Be, Too?Analysts expect Trump's sweeping tariffs to have an outsized impact on Apple stock. How concerned should investors be?
-
The Stock Market Is Selling Off. Here's What Investors Should DoInvestors started fleeing the equities market en masse in response to the Trump administration's "jaw-dropping" tariffs. But the experts say don't panic.
-
Stock Market Today: Markets Celebrate Trump's Tariff DétenteConsumer discretionary stocks led 10 of the 11 S&P 500 sector groups well into the green.
-
Stock Market Today: Stocks Skid Into Another Risk-Off TurnThe promise of the AI revolution can't overcome flickering hopes for a "Fed put."
-
Should You Sell Tesla Stock as Elon Unrest Grows?Tesla's CEO is wearing many hats and is managing them "with great difficulty."
-
5 of Warren Buffett's Best InvestmentsWarren Buffett has had plenty of wins throughout his decades of investing. Here, we highlight five of Buffett's best investments.
-
Apple's 100,000% Return Is a Result of Innovation, Brand Loyalty and BuybacksApple spends billions buying back its own shares, but this is just one catalyst behind the incredible growth in its share price.
