US markets faced another challenging day on Thursday, with concerns over economic growth weighing heavily on investor sentiment. The S&P 500 recorded its third consecutive decline, while the Dow fell sharply, reflecting growing caution ahead of a critical labour market report. Despite early optimism, particularly in the tech sector, the mood turned cautious as weak private payroll data fuelled fears of a slowing economy. However, the Nasdaq managed to edge higher, helped by a surge in Tesla shares following news of the company’s upcoming full self-driving software launch in Europe and China.

Key Takeaways:

  • S&P 500 Posts Third Consecutive Loss: The S&P 500 slipped 0.3%, closing at 5,503.41, as investor anxiety over the US economy continues to grow. This marks the index’s third straight day of losses, driven by concerns about weakening economic data and the Federal Reserve’s future policy moves.
  • Dow Drops 200 Points: The Dow Jones Industrial Average fell 219.22 points, or 0.54%, to close at 40,755.75. The drop highlights investor uncertainty, particularly ahead of the upcoming labour market report, which could further impact market sentiment.
  • Nasdaq Gains on Tesla Surge: The Nasdaq Composite edged up by 0.25% to close at 17,127.66, bouncing back from earlier gains of 1.2%. Tesla shares jumped following the company’s announcement that its full self-driving software will launch in Europe and China next year, helping offset broader market concerns.
  • Labour Market Data Sends Mixed Signals: Private payrolls data from ADP showed a sharp slowdown in August, with 99,000 jobs added, well below expectations of 140,000. This marks the slowest hiring pace since 2021. However, weekly jobless claims declined to 227,000, slightly below forecasts, providing some reassurance about the labour market’s resilience.
  • European Markets Struggle Amid US Economic Concerns: The Stoxx 600 fell 0.43%, marking the fourth consecutive day of losses. Utilities stocks managed to rise 1.66%, but the healthcare sector tumbled 1.4%. Germany’s DAX barely inched higher, gaining 0.02% as factory orders rose by 2.9% in July. France’s CAC 40 fell 0.9%, dragged down by declines in luxury stocks, with Hermès, LVMH, and Kering all suffering significant losses. The FTSE 100 also dropped 0.34%, closing lower for the fifth straight session as traders awaited Friday’s US jobs report.
  • Asian Markets Mixed as Economic Data Fuels Uncertainty: The Nikkei 225 fell 1.05% to 36,657.09, with Japan leading losses in the Asia-Pacific region following weaker-than-expected wage growth data. Real wages in Japan rose only 0.4% year-on-year, offering little relief to investors worried about potential Bank of Japan rate hikes. Meanwhile, China’s CSI 300 rose 0.17%, supported by optimism over potential policy moves to ease pressure on the property sector, while the Hang Seng dipped 0.24%. South Korea’s Kospi lost 0.21%, and Australia’s S&P/ASX 200 rose 0.4%, with market sentiment remaining mixed across the region.
  • Oil Prices Slip as OPEC+ Delays Production Increase: US crude oil pulled back slightly to close near $69 per barrel, with West Texas Intermediate settling at $69.19. Brent crude also saw a marginal drop, closing at $72.69 per barrel. OPEC+ delayed its planned production increase of 180,000 barrels per day, which had been scheduled for October, adding further uncertainty to oil markets. This comes as oil prices have faced pressure from broader concerns about the global economic outlook and a potential supply-demand imbalance.
  • Treasury Yields Decline Ahead of Key US Jobs Data: US Treasury yields ticked lower as investors awaited the upcoming nonfarm payrolls report. The yield on the 10-year Treasury dropped by nearly 4 basis points to 3.731%, while the 2-year yield dipped 2 basis points to 3.75%. The softer-than-expected private payrolls report has raised concerns about the strength of the US economy, with investors closely watching Friday’s labour market data for further insights on future Federal Reserve policy.

FX Today:

  • EUR/USD Steady as Markets Brace for US Jobs Data: The EUR/USD pair held firm on Thursday, closing up at 1.1105 (0.2%) as investors looked ahead to Friday’s critical US nonfarm payrolls report. The pair fluctuated near the 20-day Exponential Moving Average (EMA) at 1.1055, while the longer-term outlook remained positive, supported by rising 50-day and 200-day EMAs at 1.0970 and 1.0865, respectively. Upside resistance lies at 1.1200 and the July 2023 high of 1.1275, while the psychological support level of 1.1000 could cushion any declines.
  • GBP/USD Holds Above 1.3150 Amid Mixed US Data: GBP/USD traded above the 1.3150 level on Thursday, as the pair reacted to a mixed batch of US economic data. While weak ADP payrolls initially weighed on the US Dollar, better-than-expected jobless claims and ISM Services PMI data helped limit further upside for the British Pound. The Relative Strength Index (RSI) climbed above 60, signalling renewed buying interest. Immediate resistance is seen at 1.3200, with the next target at 1.3260. Support lies at 1.3130, followed by 1.3100 if selling pressure intensifies.
  • USD/CHF Subdued Amid Swiss Unemployment Rise: The USD/CHF pair traded near 0.8440 on Thursday, following Switzerland’s unemployment rate increase to 2.4% in August, up from 2.3% in the previous months. The number of unemployed rose to 111,354, a six-month high. Despite the rise in unemployment, the Swiss Franc held strong against the US Dollar, which remained under pressure. The pair is currently testing key support at 0.8432, with further downside targets at the psychological level of 0.8400 and the December 2023 low of 0.8333. On the upside, immediate resistance stands at 0.8540, followed by 0.8600 and the August 20 high of 0.8632, with any breach above these levels potentially driving further recovery.
  • AUD/USD Gains as US Dollar Softens on Weak Jobs Data: AUD/USD rose above 0.6700, closing at 0.6738, as weaker US employment data pressured the US Dollar. The pair benefitted from improved risk sentiment and a hawkish stance by the Reserve Bank of Australia. The next resistance levels are at 0.6823, marking the August high, followed by 0.6871. Immediate support is expected around 0.6685, with the 200-day Simple Moving Average (SMA) at 0.6615 providing additional downside protection.
  • Gold Surges Amid Market Uncertainty: Gold prices soared above $2,500 on Thursday, closing at $2,516 after hitting an intraday high of $2,523. The precious metal gained 0.80% as traders increased their bets on a Federal Reserve rate cut in light of weak US labour data. Gold’s path of least resistance appears to be tilted to the upside, with the next major target at the year-to-date high of $2,531. A breach above this level could push gold further toward the psychological barrier of $2,550 and potentially $2,600. However, if profit-taking occurs, support is expected at $2,500, with a further decline potentially testing the $2,470 zone, which aligns with the August 22 low.

Market Movers:

  • Tesla Jumps on Full Self-Driving Software Plans: Tesla shares surged 4.9% after the company announced plans to launch its full self-driving software in Europe and China by early next year. This news pushed the stock higher, helping to lift the Nasdaq Composite despite broader market concerns. The rollout, pending regulatory approval, marks a significant step forward for Tesla’s global expansion in autonomous driving technology.
  • Frontier Communications Plummets on Verizon Deal: Frontier Communications saw its shares nosedive 9.5% after Verizon announced it would buy the company in a $20 billion all-cash deal. The deal, which values Frontier below Wednesday’s close at $38.50 per share, spurred a sell-off in the stock. Meanwhile, Verizon shares slipped 0.4%, reflecting investor caution around the acquisition.
  • JetBlue Airways Climbs on Raised Guidance: JetBlue Airways shares rose 7.2% after the airline raised its forward guidance for third-quarter revenue. The company now expects revenue to range between a 2.5% decline and a 1% increase, compared to a previously expected loss of 5.5% to 1.5%. 
  • ChargePoint Plummets on Revenue Miss: Shares of electric vehicle charging company ChargePoint tumbled 17.8% after reporting second-quarter revenue of $109 million, falling short of analysts’ expectations of $114 million. The company also announced plans to cut 15% of its workforce and issued guidance for third-quarter revenue below market forecasts, further spooking investors.
  • Casey’s General Stores Rises on Strong Earnings: Casey’s General Stores saw its stock rise 7.4% after reporting fiscal first-quarter earnings of $4.83 per share, exceeding the expected $4.50. Despite revenue of $4.10 billion coming in slightly below the $4.15 billion forecast, the strong earnings performance pushed the stock higher.
  • McKesson Falls on Weak Earnings Guidance: McKesson shares slumped 9.9% after issuing weaker-than-expected guidance for its fiscal second-quarter earnings. The company expects earnings of $6.70 to $7.00 per share, well below the consensus estimate of $7.39 per share, sparking investor concerns about the company’s short-term outlook.
  • Toro Company Plummets After Missing Estimates: Toro Company shares dropped 10.1% after reporting disappointing fiscal third-quarter earnings. The company posted adjusted earnings of $1.18 per share, missing analyst expectations of $1.23, while revenue came in at $1.16 billion, falling short of the forecasted $1.26 billion.

As the week draws to a close, investors remain cautious amid mixed signals from labour market data and ongoing concerns about economic growth. The S&P 500 and Dow Jones continued to face pressure, with the latter dropping over 200 points, while the Nasdaq found support through gains in tech stocks like Tesla. European markets also struggled, as weak US jobs data weighed on sentiment, while Asian markets saw mixed results, with Japan’s Nikkei leading regional losses. Oil prices held steady following OPEC+’s decision to delay a production increase, while gold surged past $2,500, reflecting heightened uncertainty in the global markets. With the crucial US jobs report on the horizon, all eyes are now on the Federal Reserve’s next move and its potential impact on market direction.