The stock market finished Friday with a bang that sent the Dow Jones Industrial Average and the equal-weighted S&P 500 to record closing highs. It was a feel-good move going into the extended Labor Day weekend.
Things don't feel as good this morning, but that doesn't mean they feel bad either. They simply feel as if the late burst of buying interest seen Friday is being unwound in recognition of it being a little too much for a market that had already made a big run.
For instance, at Friday's close the S&P 500 was up 10.3% from its August 5 low while the Nasdaq Composite was up 12.8%.
Currently, the S&P 500 futures are down 28 points and are trading 0.6% below fair value, the Nasdaq 100 futures are down 132 points and are trading 0.7% below fair value, and the Dow Jones Industrial Average futures are down 205 points and are trading 0.5% below fair value.
The negative disposition stems in part from some natural consolidation activity, which is being stirred by reminders that the month of September is the worst month, on average, for the stock market.
Some weakness in the mega-cap stocks this morning is having an influential pull on the major indices. Another drag stems from a 4.3% decline in Dow component Boeing (BA) after it was downgraded to Underweight from Equal Weight at Wells Fargo with a $119 price target.
It has been a relatively slow morning for corporate news of note. The same goes for economic news, but that will change shortly with the release of the Final August S&P Global US Manufacturing PMI at 9:45 a.m. ET (prior 48.0), the July Construction Spending Report at 10:00 a.m. ET (Briefing.com consensus 0.2%; prior -0.3%), and the August ISM Manufacturing Index at 10:00 a.m. ET (Briefing.com consensus 47.5%; prior 46.8%).
The latter has market-moving cachet given the important insight it provides on the conditions in the manufacturing sector. A number below 50.0% is indicative of a contraction.
Labor market data, however, is going to steal the spotlight this week. That's because the Fed has made it known that it is watching employment conditions carefully in its economic assessment. Accordingly, labor market trends will drive the market's handicapping of the pace and scope of rate cuts by the Fed.
There is an employment index in the ISM report, but beyond that there will be the July JOLTS – Job Openings Report on Wednesday, the August ADP Employment Change Report and weekly initial jobless claims data on Thursday, and the August Employment Situation Report on Friday.
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Originally Posted September 3, 2024 – Market getting a feel for things after Labor Day weekend
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