Stock market today: Stock prices rise, labor market data increases the likelihood of an interest rate cut
Stock markets struggled for direction on Wednesday as investors digested a grim labor market update ahead of the annual Jackson Hole Economic Symposium, where Fed Chair Powell is scheduled to deliver a keynote address on Friday morning.
Given a relatively loose economic calendar preliminary data from the Bureau of Labor Statistics showed that 818,000 fewer jobs were created in the U.S. in the 12 months ending March 2024 than originally expected. That means the U.S. added an average of 173,000 jobs per month during that period, compared to the previous estimate of 242,000.
At the same time, the downward revision of labor market data means that productivity, which enables a higher standard of living, was higher than previously assumed.
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The focus was also on the minutes of the US Federal Reserve meeting in Julywhere the central bank Interest charges unchanged, but Powell noted in his subsequent press conference that the committee had discussed a possible rate cut in September.
In fact, according to protocolAlmost all participants were encouraged by recent data pointing to a decline in inflation, and “the vast majority noted that if data continued to be broadly in line with expectations, an easing of monetary policy at the next meeting would probably be appropriate.”
According to the CME Group FedWatch ToolFutures traders are now pricing in a 61.5% probability that the Fed will cut rates by a quarter of a percentage point in September. While this is down from yesterday’s probability of 71%, the odds of a 50 basis point cut (0.50%) have increased to 38.5% from 29% a day ago.
Target cracks after beat-and-raise quarter
In individual stock news, Goal (TGT) shares rose 11.2% after the wholesaler exceed sales and profit expectations for the second quarter and raised its earnings forecast for the full year.
“Sales in the non-discretionary goods sector continue to rise, with the apparel sector standing out in particular this quarter,” says analyst at CFRA Research. Arun Sundaram. “Operating margins reached 6.4%, an important milestone in TGT’s journey back to 6% operating margins for the full year, thanks to cost savings, product mix and shrink improvements.”
The analyst reiterated his buy rating for the stock, citing TGT’s “earnings growth potential and relatively disappointing valuation.”
TJX rises as consumers value value
TJX Companies (TJX) was another post-earnings winner, gaining 6.1% after the parent company of TJ Maxx, HomeGoods, HomeSense and Sierra beat expectations for the second fiscal quarter and raised the outlook for the full year.
“Discounters continue to benefit from price-conscious consumers who are looking for bargains,” says Jose Torressenior economist at Interactive Brokers.
Ford changes its electric car strategy
Thinking outside the box Results calendar, Ford Motor (F) shares rose 1.5% after the automaker said it would change its electric vehicle (EV) strategy to boost profitability. Plans include discontinuing the three-row all-electric SUV and delaying production of its electric truck from 2025 to 2027.
Ford shares have not had an easy time of it and have fallen by around 11 percent since the beginning of the year, adjusted for price. Analyst at UBS Global Research Josef Spak attributes Ford’s problems to fundamental weaknesses.
“We believe the market still lacks confidence in Ford’s EV and software strategy, which adds to the problem of higher cash levels and lack of higher cash yields as investors are concerned about what return they will get on that cash,” says Spak. The analyst rates F stock “Neutral,” which is equivalent to a “Hold.”
Nike achieves longest daily winning streak in 17 years
Elsewhere, Nike (NKE) rose 0.5% on Wednesday, bringing its daily winning streak to 17 – the longest streak since February 2007. Dow Jones shares The news from earlier this month was that Bill Ackman’s Pershing Square Capital Management initiated an investment in shoe and clothing retail.
Accordingly Brian MulberryClient Portfolio Manager at Zacks Investment ManagementNot only did Ackman buy Nike at an attractive price, the position also gives the activist investor “the opportunity to have a positive influence on the future direction of the company.”
As for the main indices, Dow Jones Industrial Average closed with a plus of 0.1% at 40,890, S&P500 rose 0.4% to 5,620, and the Nasdaq-Composite rose by 0.6% to 17,918.
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