U.S. Stocks Lack Direction Amid Conflicting Economic Data

Barry Adams
15 Sep, 2022
New York City

Stocks on Wall Street lacked direction and struggled to stay above the flat-line as investors digest conflicting trends in the economy. 

Economy is slowing down as the housing market faces surging mortgage rates but labor market conditions remain tight and consumer spending is holding up despite high inflation. 

However, global markets remain defensive as nervous investors digest the implications of higher rates and economic slowdown. 

Economic slowdown worries spilled over energy markets and crude oil prices eased in New York and in European trading. 

Weakening economic backdrop and stubborn inflation has also lifted bond yields around the world. 

The S&P 500 index rose 0.2% to 3,954.50 and the Nasdaq Composite index gained 0.24% to 11,743.87. 

Financials led the early gains in the session with banks and brokerage companies leading the gainers. 

Oil complex traded lower after energy prices eased from one-week highs. 

Adobe Inc plunged 10% after the software company said it agreed to acquire design software platform developer Figma for $20 billion. 

 

Weekly Jobless Claims Lowest Since May 

Initial weekly jobless claims declined 5,000 to 213,000 in the week ending on September 10, the U.S. Department of Labor said Thursday. 

The initial claims were the lowest since the last week in May highlighting the tight labor market conditions. 

Initial claims plunged 40% from 363,000 a year ago in the similar period. 

Seasonally unadjusted claims declined 16,934 from the previous week to 155,961. 

 

Retail Sales In August Rise 0.3% 

Retail sales in August rose 0.3% from July, when sales fell 0.4% after a revision, the U.S. Census Bureau and Commerce Department said Thursday.  

July retail sales were revised lower from flat to a decline of 0.4%. 

Retail sales data are not adjusted for inflation and falling gasoline prices helped consumers to make other purchases. 

Gasoline stations sales declined 4.2%, furniture store sales fell 1.3%, and sales at non-store retailers decreased 0.7%. 

Excluding gasoline stations, sales increased 0.8%. 

Core retail sales which exclude automobiles, gasoline, building materials and food services, were flat.

 

Industrial Production Falls 

Industrial production in August declined 0.2% from July but rose 3.7% from a year ago, the Federal Reserve Board reported Thursday. 

Manufacturing output edged up 0.1% after rising 0.6% in July. 

The index for mining was unchanged, and the index for utilities decreased 2.3%. 

Capacity utilization declined 0.2 percentage point in August to 80.0%. 

 

Bond Market Route Continues 

The yield on 10-year U.S. Treasury bonds are above 3.45% and approaching the peak of 3.5% reached in June and 2-year notes are now at 3.8%, a 15-year high. 

In addition, the bond yields in Germany are at 1.7%, a 8-year high, as the deepening energy crisis shows no sign of easing. Yields in Greece and Italy are above 4%, prompting worries of another sovereign debt crisis in the eurozone. 

 

Crude Oil Searches Bottom

Global market sentiment has been weakening on the extended coronavirus lockdowns and housing market problems in China, natural gas crisis in Europe, and escalating interest rates in the U.S. 

Moreover, shifting of Russia's oil supply to Asia and a conflict between Armenia and Azerbaijan has kept the supply worries in front and center. 

WTI crude oil price eased $1.20 to $87.22 a barrel and Brent crude price declined $1.40 to $92.71. 

Surging energy costs also negatively impacted trade balance for the eurozone.

 

Railroad Strike Averted for Now 

Railroad stocks traded higher after President Joe Biden announced a preliminary agreement for a better pay and working conditions for railroad workers. 

The agreement is likely to avert the strike for now and disruptions in services. 

In corporate news, Adobe dropped nearly 10% after the company announced a deal to acquire cloud-based software design company Figma Inc for $20 billion  in cash and stock. 

Danaher Corp jumped 3% after the medical technology and industrial products maker said it plans to separate its environment and science applications division as a separate company in the last quarter of 2023.