S&P 500 ends higher as jobs data fuels rate-hike optimism

All the indexes were way up in the morning, the Dow up some 220 points, before all went into a dive around 10 a.m. reaching break-even around noon, then begin a slow rise for a modest gain on the S&P, the Nasdaq still a wash, the Dow still up 115 at close.  The employment report again reinforced optimism for a rate pause for which the odds in September now stand at 93% vs 80% on Monday. For the week, the indexes were all up between 1.4 and 3.2%. 

The consensus is that the Fed is winning the battle against inflation and, as today’s expert put it, “the Fed becoming more dovish could lead to a substantial rally in stocks.” The markets are closed Monday for Labor Day and, as has been predicted all week, volume was exceedingly light all week, today at just 8.9 billion. 

S&P 500 ends higher as jobs data fuels rate-hike optimism

By Shristi Achar A and Noel Randewich

Fri September 1, 2023 4:20 PM

DJ: 34,721.91  -168.33        NAS: 14,034.97  +15.66       S&P: 4,507.66  -7.21        8/31

DJ: 34,837.71  +115.80       NAS: 14.031.82  -3.15          S&P: 4,515.77  +8.11       9/1

Sept 1 (Reuters) - The S&P 500 (.SPX) ended higher on Friday after a jump in unemployment cemented expectations of a pause in interest rate hikes this month, while shares of streaming firms tumbled due to a rate dispute between Disney and Charter Communications.  The Labor Department's report showed the August unemployment rate rose to 3.8% while wage growth slowed. Nonfarm payrolls rose more than expected, though data for July was revised lower to 157,000 job additions.  The data added to recent macroeconomic evidence that the Federal Reserve is winning its battle against inflation, and it cemented expectations the central bank is near the end of its interest rate hiking cycle. 

"The data makes the case for the Fed becoming more dovish as we head into the fall. If the end of tightening comes sooner than later, that could lead to a substantial rally in stocks," said Keith Buchanan, a portfolio manager at GLOBALT Investments in Atlanta.  Interest rate futures suggest traders see a 93% chance the Fed will keep interest rates unchanged at its meeting later this month, according to CME's FedWatch tool.

Walt Disney (DIS.N) dropped 2.4% and Charter Communications (CHTR.O) fell 3.6% after the companies traded salvos over an unresolved distribution agreement after several channels, including ESPN, went dark on Thursday for customers of Charter's Spectrum cable service.  Other streaming companies also fell, with Warner Bros Discovery (WBD.O) slumping 12%, Paramount Global (PARA.O) losing 9.5% and Fox Corp down nearly 6%.  The most traded stock in the S&P 500 was Tesla Inc , with $32.6 billion worth of shares exchanged during the session. The shares declined 5% after the EV maker cut prices for its Model S and Model X vehicles in the U.S. 

Unofficially, the S&P 500 climbed 0.18% to end at 4,515.77 points.  The Nasdaq (.IXIC) declined 0.02% to 14,031.82 points, while Dow Jones Industrial Average (.DJI) rose 0.33% to 34,837.71 points.  Of the 11 S&P 500 sector indexes, six rose, led by energy (.SPNY), up 2.05%, followed by a 1.01% gain in materials (.SPLRCM).  For the week, the S&P 500 rose 2.50%, the Dow added 1.43% and the Nasdaq climbed 3.25%.

Volume on U.S. exchanges was relatively light, with 8.9 billion shares traded, compared to an average of 10.4 billion shares over the previous 20 sessions.

The U.S. stock market will remain closed on Monday for the Labor Day holiday.

Broadcom (AVGO.O) fell 5.5% after the chipmaker projected current-quarter revenue below expectations, while Dell Technologies (DELL.N) surged 21% after the personal computer maker raised its annual forecasts for revenue and profit.  Lululemon Athletica (LULU.O) gained 6% after the yogawear maker lifted its annual profit and revenue forecasts for a second time.  Walgreens Boots Alliance (WBA.O) fell 7.4% after the pharmacy chain said CEO Rosalind Brewer had stepped down. 

Advancing issues outnumbered falling ones within the S&P 500 (.AD.SPX) by a 2.1-to-one ratio.

The S&P 500 posted 28 new highs and 20 new lows; the Nasdaq recorded 84 new highs and 90 new lows.