Markets are pretty much flat again, indicating most participants are playing it safe ahead of tomorrow's all important Employment Situation Report.
The S&P 500 opened 0.60% higher this morning before it fell into negative forty minutes into the session, but recently the benchmark index has rebounded to hold a 0.35% gain to 998. Similar movements have caused the Dow to see a 0.26% gain to 9,304, while the Nasdaq has improved 0.34% to 1,973.
The average weekly number of claims in July was 560k, whereas the weekly average in August was 571,250, a two-month high.
The stubbornly weak data indicates that the labor market remains awful on both fronts: people are still getting fired while the prospects for getting a new job remain bleak.
“The lack of job creation remains a big headwind for cash-starved and credit-constrained consumers, and thus a major impediment for the fledgling recovery,” said Sal Guatieri from BMO Capital Markets.
The 10:00 services report from the Institute for Supply Management was slightly more positive as overall conditions saw their highest index level since last September. The report climbed two points to 48.4 in August, led my month-to-month improvements in prices, production, new orders, and employment. Results above 50 indicate growth, so summer ends with the services sector nearly on the cusp of growth.
The jobs component moved upwards by 2 points to 43.5, indicating that, contrary to jobless claims report, conditions in August were not as bad as July. Yet the index remains far from suggesting growth in the labor market.
At 11:00 the Treasury Department announced the terms of next week's 3s/10s/30s auction cycle. All offerings increased by $1 billion...in line with expectations. Here is the breakdown of next week's auction schedule:
Tuesday Sept 8: $38 billion 3 yr notes
Wednesday Sept 9: $20 billion 10 yr notes
Thursday Sept 10: $12 billion 30 yr bonds
In total $70 billion will be sold next week. This issuance will raise about $55billion in new cash for Treasury.
No more news is scheduled for the rest of the day, but investors will be trading in anticipation of tomorrow’s employment situation report ― the most important data release of the month.
The median forecast is that 225,000 jobs were lost in August, compared with 247,000 in July. As seen with the two reports from today, labor trends have been heading in both directions depending on where you look, so there’s definitely room for a surprise in both ways. The report also includes the unemployment rate, which is set to rise two-tenths to 9.6%, a multi-decade high.
