Stocks Mitigate Losses Ahead Of Apple, Amazon Earnings; Treasury Yields Rocket On Debt Frenzy: Thursday's Market Drivers

Stocks are attempting to stabilize after a volatile session on Wednesday, with the tech sector showing slight signs of recovery while awaiting the quarterly earnings reports of Apple, Inc. AAPL and Amazon Inc. AMZN, scheduled to be released after Thursday’s closing bell.

Meanwhile, long-term Treasury yields continue to rise, causing a sharp steepening of the yield curve. The 30-year Treasury yield has surged by 12 basis points to 4.3%, while the 10-year yield has climbed by 10 basis points to 4.18%, both reaching their highest levels since November 2022.

The bond market has been impacted by Fitch’s U.S. ratings downgrade and announcements of larger-than-expected issuances for the current month, which have put pressure on bond yields.

Looking ahead, Friday will bring the highly anticipated release of July’s labor market data, with economists predicting a small decline in non-farm payrolls by 9,000 to 200,000, an unchanged jobless rate of 3.6%, and a cooling growth in hourly wages at 4.2% year-on-year.

Cues From Thursday's Trading:

The S&P 500 was broadly unchanged, while the tech-heavy Nasdaq 100 flipped to gains, up 0.4%.

The Dow Jones Industrial Average was 0.1% higher, while small caps in the Russell 2000 index were flat.

US Index Performance On Thursday

Analyst Color:

The odds are increasing that stocks could finally take some type of break, said Carson Group's Ryan Detrick. The analyst sees a modest pullback of approximately 5% to be “perfectly normal,” given the S&P 500 closed higher for five consecutive months.

August, the analyst noted, is a poor performer and trailed behind only September and December in the last 10 years.

Historically, when the S&P 500 Index was up more than 17.5% for the year ahead of August, the month has mostly seen negative returns, Detrick added.

Meanwhile, Morgan Stanley's Lisa Shalett said the Fed may not begin to cut rates any time soon, as the core inflation is still too hot for its liking.

“Consider rebalancing toward value-style equities or those with ‘growth at a reasonable price’ attributes,” she suggested.

Thursday’s Trading In Major US Equity ETFs: In midday trading on Thursday, the SPDR S&P 500 ETF Trust SPY was 0.1% lower to $449.79, the SPDR Dow Jones Industrial Average ETF DIA held steady at to $352.68 and the Invesco QQQ Trust QQQ was 0.1% higher to $374, according to Benzinga Pro data.

The Energy Select Sector SPDR Fund XLE rallied 1.7% outperforming all other S&P 500’s sectors. The Real Estate Select Sector SPDR Fund XLRE was the laggard, down 2.3%, followed by the Utilities Select Sector SPDR Fund XLU, down 1.9%.

Latest Economic Data:

The Services PMI measured by S&P Global was revised by 0.1% lower to 52.30 points in July, indicating a slowdown from the 54.40 points recorded in June 2023.

The ISM Services PMI declined from 53.9 in June to 52.7 in July, falling below the expected 53.

The Department of Labor's latest report on jobless claims showed a marginal uptick of 6,000 from the previous week's 221,000 filings, meeting expectations.

See also: What Are Futures Contracts

Stocks In Focus:

• PayPal, Inc. PYPL fell over 10% in reaction to its quarterly results.
• The Clorox Company CLX rose over 9%, after reporting better-than-expected results in Q2.
• Wayfair Inc. W soared 23% after beating Street’s estimates in Q2.
• DXC Technology Company DXC tumbled 30% on a Q2 earnings miss.
• Expedia Group, Inc. EXPE fell 17% after missing revenue estimates. Similarly, Qualcomm Inc. QCOM fell 9%.
• Companies reporting after the close include Amazon, Inc. AMZN, Apple, Amgen, Inc. AMGN, Atlassian Corporation TEAM, DraftKings, Inc. DKNG and Gilead Sciences, Inc. GILD.

Commodities, Bonds, Other Global Equity Markets:

Crude oil rose 2.2%, with a barrel of WTI-grade crude trading at $85. The United States Oil Fund ETF USO was 2.1% higher to $73.  

Treasury yields were higher, with the 10-year yield up by 10 basis points to 4.18% and the two-year yield flat at 4.89%. The iShares 20+ Year Treasury Bond ETF TLT was 2.2% lower for the day. 

The dollar fell, with the U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF UUP, down 0.2%. The EUR/USD pair, which is tracked by the Invesco CurrecyShares Euro Currency Trust FXE, was 0.2% higher to 1.0957.

European equity indexes closed in the red. The SPDR DJ Euro STOXX 50 Etf  FEZ fell 0.2%. 

Gold rose 0.1% to $1,935/oz. The SPDR Gold Trust GLD was flat. Silver fell 0.4% to $23.61, with the iShares Silver Trust SLV down 0.4% to $21.7. Bitcoin BTC/USD was 0.4% higher to $29,278.

Staff writer Piero Cingari updated this report midday Thursday. 

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