[New York Stock Market] Mixed Close Ahead of Employment Report, Dow Down 0.26%... WTI Falls Below $90

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] Major indices on the U.S. New York Stock Exchange closed mixed on the 4th (local time), a day before the release of the employment report that can gauge the labor market and economic health. International oil prices fell to levels seen before Russia's invasion of Ukraine.

On this day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 32,726.82, down 85.68 points (0.26%) from the previous session. The S&P 500, which focuses on large-cap stocks, recorded 4,151.94, down 3.23 points (0.08%). Meanwhile, the tech-heavy Nasdaq index closed up 52.42 points (0.41%) at 12,720.58.

By sector, energy stocks were particularly weak due to the drop in oil prices. Marathon Oil closed down 6.20% from the previous session. Schlumberger fell 4.47%, Chevron dropped 2.72%, and ExxonMobil also declined more than 4%.

Electric truck maker Nikola rose 6.28% after reporting sales that exceeded market expectations before the opening. Lucid fell 9.73% on news of lowered production forecasts. Eli Lilly slipped more than 2% due to earnings below market expectations and downward revisions to future outlooks.

Investors monitored corporate earnings and economic indicators released on this day while awaiting the employment report to be published the next day. Earnings reports from Kellogg, ConocoPhillips, and Nikola generally exceeded expectations. After market close, Virgin Galactic, AMC Entertainment, and Beyond Meat are scheduled to report earnings.

The employment data released on this day was weak. The U.S. Department of Labor announced that initial jobless claims last week increased by 6,000 to 260,000, marking a rise after two weeks of decline. This figure is close to the level of the second week of July (261,000), which was the highest since November last year. Continuing claims, which represent those applying for unemployment benefits for at least two weeks, also rose by 48,000.

According to Challenger, Gray & Christmas (CG&C), planned layoffs in July totaled 25,810, the second highest level this year. Although down from over 30,000 in the previous month, it represents an increase of more than 36% compared to a year ago.

Recently in the U.S., concerns have been growing that the labor market is gradually cooling due to the Federal Reserve's accelerated tightening. As a result, market attention is focused on the U.S. Department of Labor's July employment report to be released on the 5th. This report is expected to provide insights into the current labor market and economic health, as well as hints about the Fed's future pace of interest rate hikes.

Art Hogan, Chief Market Strategist at B. Riley Financial, referred to the employment report, saying, "Today is one of the days waiting for the most important data (employment report) of the week." Mike Loewengart, Managing Director of Investment Strategy at Morgan Stanley, said, "Investors will look to see if the labor market can withstand the Fed's tightening as it did in June." On Wall Street, it is expected that the increase in nonfarm payrolls last month will be 258,000, down from 372,000 in the previous month. The unemployment rate is expected to remain at 3.6%.

Meanwhile, the U.S. trade deficit for June improved thanks to a surge in energy product exports. According to the U.S. Department of Commerce, the trade deficit in goods and services for June was $79.6 billion (about 104.2 trillion KRW), down 6.2% from the previous month. This marks the third consecutive month of decline and is below expert forecasts. The reduction in the trade deficit is expected to help improve the U.S. Gross Domestic Product (GDP) figures.

On this day in the New York bond market, the 10-year Treasury yield fell to around 2.68%. The inversion between the 2-year and 10-year yields, often seen as a recession indicator, continues. The Dollar Index, which shows the value of the U.S. dollar against six major currencies, dropped to around 105.

International gold prices recovered to the $1,800 per ounce level, supported by declines in the U.S. dollar value and U.S. Treasury yields. On the New York Commodity Exchange, December delivery gold closed up 1.4% ($25.80) at $1,802.50 per ounce.

Oil prices fell to their lowest levels since February amid growing concerns that demand may weaken due to a recession. On the New York Mercantile Exchange (NYMEX), September delivery West Texas Intermediate (WTI) crude oil closed at $88.50 per barrel, down $2.12 (2.3%) from the previous session. This is the first time in about six months since February 10, before the Ukraine invasion, that WTI prices closed below $90 per barrel.

On the same day, October delivery Brent crude traded on the London ICE Futures Exchange also fell to as low as $93.20 per barrel during the session, marking the lowest level since February 21.

Consecutive interest rate hikes by central banks worldwide are heightening concerns about recession or economic slowdown. Following two consecutive 'giant steps' (0.75 percentage point rate hikes) by the Fed, the Bank of England (BOE) also implemented a 'big step' (0.5 percentage point hike) for the first time in 27 years on this day.

This content was produced with the assistance of AI translation services.