U.S. stocks traded lower as the global markets continued to grapple with a recent uptick in hawkish central bank tones amid a rise in international bond yields. Treasuries were lower on the rising yields, crude oil prices rebounded on some bullish oil inventory data, gold dipped and the U.S. dollar declined. In economic news, ADP’s employment data was below expectations ahead of tomorrow’s June labor report. On the equity front, PriceSmart and L Brands reported figures that were shy of analysts’ forecasts, while the tech sector and Tesla added to recent drops.
The Dow Jones Industrial Average (DJIA) lost 158 points (0.7%) to 21,320, the S&P 500 Index declined 23 points (0.9%) to 2,410, and the Nasdaq Composite dropped 61 points (1.0%) to 6,089. In moderate volume, 878 million shares were traded on the NYSE and 2.0 billion shares changed hands on the Nasdaq. WTI crude oil increased $0.39 to $45.52 per barrel and wholesale gasoline added $0.03 to $1.53 per gallon. Elsewhere, the Bloomberg gold spot price dipped $1.96 to $1,225.08 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.5% lower at 95.81.
L Brands Inc. (LB $46) fell sharply after posting a 9.0% y/y drop in June same-store sales, versus the expected 6.8% decline, as sales tumbled at its Victoria’s Secret stores.
PriceSmart Inc. (PSMT $81) reported fiscal Q3 earnings-per-share (EPS) of $0.62, versus expectations of $0.67, as revenues rose 3.7% y/y to $730 million, compared to the projected $735 million. Shares saw solid pressure.
Tesla Inc. (TSLA $309) continued a recent slide amid competition concerns toward the electric car maker and safety uncertainty after the Insurance Institute for Highway Safety (IIHS) announced that the Model S earned an “acceptable” rating, the second highest designation, in a collision test. TSLA responded by saying the most objective and accurate independent testing of vehicle safety is currently done by the U.S. Government, which found Model S and Model X to be the two cars with the lowest probability of injury of any cars that it has ever tested.
The June Institute for Supply Management (ISM) non-Manufacturing Index (chart) rose to 57.4 from May’s unrevised 56.9 level, and compared to the Bloomberg forecast of a dip to 56.5. A reading above 50 denotes expansion. New orders rose 2.8 points month-over-month (m/m) to 60.5 and business activity ticked higher and remained above the 60 mark, while employment declined 2.0 points to 55.8. Prices rose increased 2.9 points to 52.1. The ISM said the majority of comments from respondents were positive about business conditions and the overall economy.
The ADP Employment Change Report showed private sector payrolls rose by 158,000 jobs in June, below forecasts of a 188,000 gain, while May’s increase of 253,000 jobs was revised to a gain of 230,000. Today’s ADP data, which does not include government hiring and firing, comes ahead of tomorrow’s broader June nonfarm payroll report, expected to show an increase of 178,000 jobs to the headline rate and a rise of 169,000 jobs to private sector payrolls (economic calendar). The unemployment rate is forecasted to remain at 4.3%, and average hourly earnings are projected to rise 0.3% m/m.Schwab Center for Financial Research – Market Analysis Group
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