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Market Snapshot: U.S. stocks end mixed as investors await July jobs report

U.S. stocks were mostly lower Thursday afternoon, losing ground as investors weighed another batch of corporate earnings and looked ahead to Friday’s July employment report.

What’s happening

The Dow Jones Industrial Average
DJIA,
-0.26%

was down 91 points, or 0.3%, at 32,718.

The S&P 500
SPX,
-0.08%

was down 6 point, or 0.2%, to trade at 4,149.

The Nasdaq Composite
COMP,
+0.41%

gained 29 points, or 0.2%, at 12,696.

Stocks bounded back sharply Wednesday after back-to-back losses. The Dow jumped 416.33 points, or 1.3%, while the S&P 500 rose 1.6% and the Nasdaq Composite jumped 2.6%.

What’s driving the market

Stocks were drifting lower after data showed first-time claims for U.S. jobless benefits rose by 6,000 to 260,000 in the week ended July 30. Investors were seen largely looking past Thursday’s data ahead of the July employment report due Friday.

“With the jobs report coming tomorrow, today’s slight uptick in jobless claims isn’t likely to be a major market nor Fed mover. Investors will be waiting to see if the labor market can withstand the Fed’s rate-hike campaign as well as it did in June,” said Mike Loewengart, managing director for investment strategy at E-Trade from Morgan Stanley, in emailed comments.

“Remember that while jobless claims have been slowly rising, the labor market remains robust,” he wrote.

Employment gains in July are expected to drop to 258,000 from 372,000 in the prior month, a poll of economists by The Wall Street Journal estimates. If so, it would mark the smallest increase since December 2021.

“We should anticipate a drop from recent levels, but perhaps not too big a drop, as demand remains strong. The 250,000 expectations look reasonable, and perhaps even a bit conservative,” said Brad McMillan, chief investment officer at Commonwealth Financial Network in an emailed comment on Thursday. “If we get anything in the 200,000-300,000 range, that would be in line with the data so far this year and support continued growth.”

However, worse results would signal that the U.S. economy has “suddenly gotten much worse, and a recession is going to happen sooner rather than later—and that would spook markets,” according to McMillan.

See: Hiring slowdown? U.S. seen adding just 258,000 jobs in July

U.S. stocks were lifted Wednesday by data that showed resilience in the services sector and strong factory orders.

Federal Reserve officials have continued to warn that achieving a so-called soft landing for the economy as they raise interest rates to battle inflation will be difficult. Cleveland Fed President Loretta J. Mester said on Tuesday that “certainly, it hasn’t slowed enough (a) to call it a recession and (b) to see that moderation in demand.” She suggested that interest rates had more room to rise and that she was still looking for a clear slowdown in inflation.

“We’re committed to getting inflation down,” Mester said at a seperate event at the Economic Club of Pittsburgh on Thursday. “We’re not in a recession right now. Are the risks of recession going up? Yes.

Market participants expect that the prospect of an economic slowdown will lead the Fed to slow interest rate hikes, with fed-funds futures markets pricing in rate cuts in 2023.

“It’s worth noting that stock markets rallied on the signs of stronger-than-expected growth. This is significant because recently they’ve been rallying on signs of weaker growth, which would mean that the Fed was likely to stop hiking rates and start cutting early on,” said Marshall Gittler, head of investment research at BDSwiss Holding Ltd..

Investors continue to wade through a flood of corporate earnings reports. Fast food chain Shake Shack Inc.
SHAK,
-6.36%

shares shed 6.3% Thursday after the company reported quarterly earnings that fell short of Wall Street’s expectations for revenue. Alibaba Group
BABA,
+1.90%

shares climbed after its fiscal first-quarter earnings beat expectations, sending other two Chinese e-commerce giants JD.com
JD,
+3.63%

and Pinduoduo
PDD,
+3.24%
’s
stocks higher.

Coinbase Global Inc.
COIN,
+10.01%

shares soared after the crypto exchange firm announced a partnership with BlackRock that will offer direct access to bitcoin to some of its institutional clients.

Investors continue to weigh whether a bounce that has seen the S&P 500 rise more than 13% off its 2022 low set in June will continue or will prove to be another bear-market bounce. Some analysts have seen encouraging signs in the form of broader participation in the rally by individual stocks.

Earlier, the Bank of England hiked interest rates by 50-basis-point on Thursday as it predicted U.K. inflation may hit double digits by the end of 2022, despite warning that a long recession is on its way. British consumer price inflation hit a 40-year high of 9.4% in June. 

Read: Why the U.S. stock rally looks more like a new bull market than a bear bounce to these analysts

Companies in focus

Eli Lilly
LLY,
-2.56%

shares fell after the drugmaker reported second-quarter results that came in below Wall Street’s forecast. 

Shares of Lucid Group Inc. LCID fell 10.1% after the electric-vehicle maker late Wednesday announced a reduction in its production forecast. Lucid said it now expects its 2022 production volume to hit 6,000 to 7,000 vehicles, after stating 12,000 to 14,000 vehicles in May.

Nikola Corp.
NKLA,
+6.28%

shares rose 6.3% after the electric vehicle maker reported a narrower-than-expected loss and revenue that beat forecast, and reiterated its target for Tre BEV truck deliveries.

American depositary receipts of Alibaba Group Holding Ltd.
BABA,
+1.90%

rose 1.5% after the Chinese e-commerce company topped expectations with its latest financials and indicated that business trends improved as the June quarter wore on.

Coinbase Global Inc.
COIN,
+10.01%

shares jumped 9.3% after the crypto exchange company announced a partnership with BlackRock
BLK,
+0.80%

 that will allow its institutional clients to buy bitcoin.

Other assets

The yield on the 10-year Treasury note
TMUBMUSD10Y,
2.665%

fell 3 basis points to 2.676%, while the yield on the 2-year Treasury note
TMUBMUSD02Y,
3.033%

fell to 3.042%. Yields and debt prices move opposite each other.

The ICE U.S. Dollar Index
DXY,
-0.73%
,
a measure of the currency against a basket of six major rivals, fell 0.8%.

Oil futures closed below the $90 a barrel threshold with the West Texas Intermediate crude for September delivery 
CL.1,
-2.47%

CL00,
-2.47%

CLU22,
-2.47%

lost $2.12, or 2.3%, to end at $88.54 a barrel on the New York Mercantile Exchange. 

Gold for December delivery 
GC00,
+1.91%

GCZ22,
+1.91%

 jumped $30.50, or 1.7%, to close at $1,806.90 per ounce, the highest for the most-active contract since June 30, according to FactSet data. 

Bitcoin
BTCUSD,
-3.50%

dropped 3.4% to $22,531.

The STOXX Europe 600 Index
SXXP,
+0.18%

rose 0.8%, and London’s FTSE 100 Index
UKX,
+0.03%

ended 0.03% higher.

The Shanghai Composite
SHCOMP,
+0.80%

ended 0.8% higher, while the Hang Seng Index
HSI,
+2.06%

jumped 2.1% in Hong Kong and Japan’s Nikkei 225
NIK,
+0.69%

advanced 0.7%.

Hear from Carl Icahn at the Best New Ideas in Money Festival on Sept. 21 and Sept. 22 in New York. The legendary investor will reveal his view on this year’s wild market ride.

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