Traders await Friday's job report
U.S stocks relinquished modest gains to end mostly flat on Thursday, 04 August 2016 as investors awaited the closely watched jobs report due on Friday. An earlier bounce for equities, following the Bank of England's decision to cut its key interest rate for the first time in seven years faded as Wall Street wrestled with mixed economic reports.
The Dow Jones Industrial Average ended near break-even at 18,352.05, with the blue-chip benchmark limited by a 1% fall in shares of Walt Disney offsetting a 1% gain in Visa. The Nasdaq Composite Index closed up 6.51 points, or 0.1%, at 5,166.25. The S&P 500 index closed virtually flat at 2,164.25, with the tech and materials the only two sectors finishing in positive territory.
In particular, the BOE exceeded market expectations when it announced a 25 basis point cut in its Bank Rate to a record-low 0.25%, and added that it will purchase up to GBP10 billion of U.K. corporate bonds, and expand its purchase of UK government bonds by GBP60 billion, bringing its total stock of asset purchases to GBP435 billion.
Investors lacked conviction throughout today's session, mulling the possible implications of the BOE decision and cognizant that the Employment Situation Report for July will be released on Friday before the start of trading.
Friday's jobs report is likely to command more attention given the surprising readings from the two previous labor data.
Among economic data expected for the day, report of weekly jobless claims revealed early signs of strength in the labor market, showing that people applying for first-time unemployment benefits rose by 3,000 to 269,000 last week, marking the highest level since the end of June, though claims still point to a healthy jobs market. Other economic data hasn't been as steady. Factory orders fell 1.5% in June, the second consecutive sharp decline.
Crude oil futures regained positive momentum after a morning of up-and-down trading on Thursday, 04 August 2016 building on strong gains scored after an unexpectedly large drop in gasoline supplies on Wednesday. Oil has been under pressure as traders wrestle with a global glut of crude and worries about the outlook for global economic growth. Futures fell below $40 a barrel earlier this week on worries about a global glut.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in September rose $1.10 a barrel, or 2.7%, to settle at $41.93 a barrel. Oil pushed solidly higher after flipping between gains and losses in early action.
October Brent crude on London's ICE Futures exchange rose $1.19, or 2.8%, to $44.29 barrel, after rallying $1.30, or 3.1% to $43.10 a barrel on Wednesday.
U.S. oil bounced Wednesday after U.S. government data surprised traders with a 3.3 million-barrel decline in gasoline inventories. Changes to fuel inventories are of particular interest to traders, as a renewed glut of fuel has pushed oil prices lower in recent weeks. Oil prices had entered a bear market, defined as a fall of 20% or more from a recent high, earlier in the week.
Bullion prices ended in a mixed mode on Thursday, 04 August 2016. Gold futures finished moderately higher on Thursday after the Bank of England announced a rate cut for the first time since 2009 and unveiled a batch of stimulus measures aimed at stimulating the country's economy in the wake of the June 23 vote to exit the European Union.
December gold rose $2.70, or 0.2%, to settle at $1,367.40 an ounce. Silver futures for September delivery slipped 3 cents, or 0.1% to settle at $20.44.
The yellow metal rose even as the dollar climbed which tends to be negative for commodities priced in the currency. A stronger dollar tends to diminish the appeal of assets priced in greenbacks.
The U.S. Dollar Index finished modestly higher as the euro and the pound lost ground against the buck. The single currency declined 0.2% against the dollar.
Treasuries finished the day on a higher note as yields came down across the curve. The 10-yr note yield finished lower by four basis points.
Participation was below the recent average as fewer than 796 million shares changed hands at the NYSE floor.
Tomorrow's data includes the 8:30 ET release of the Employment Situation Report for July. The report is expected to show that nonfarm payrolls increased by 185,000. Separately, the June Trade Balance Report (consensus -$42.7 billion) June Consumer Credit (consensus $16.2 billion) will cross the wires at 8:30 ET and 15:00 ET.
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