Lackluster Jobs Report Sends Equities Mostly Lower…..

U.S. equities finished mostly lower, as a lackluster jobs report brought peak economic and earnings growth concerns back to the forefront. Private sector payrolls, as reported by ADP fell well short of analyst forecasts and underwhelmed investors as a round of upbeat domestic services sector reports were quickly overshadowed. The services sector offered some economic optimism as the ISM Non-manufacturing Index posted its highest level on record and Markit’s Services PMI was revised modestly higher, while reads overseas were mostly positive. Elsewhere, mortgage applications declined after the prior week’s rebound. On the earnings front, General Motors beat on both the top and bottom lines and the automaker upped its outlook, while Amgen and Activision Blizzard also bested forecasts, with the latter announcing the departure of two executives. Treasuries were mixed and the U.S. dollar reversed to the upside, while gold was little changed and crude oil prices fell sharply. Asia finished higher on the upbeat China data, while stocks in Europe also finished in the green amid upbeat earnings results in the region.

The Dow Jones Industrial Average declined 324 points (0.9%) to 34,793, the S&P 500 Index lost 20 points (0.5%) to 4,403, and the Nasdaq Composite increased 19 points (0.1%) to 14,781. In moderately heavy volume, 886 million shares were traded on the NYSE and 4.3 billion shares changed hands on the Nasdaq. WTI crude oil fell $2.41 to $68.15 per barrel. Elsewhere, the gold spot price nudged $0.40 higher to $1,814.50 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.2% higher at 92.28.

Private sector job growth misses forecasts, mortgage applications drop, services data upbeat…..

The ADP Employment Change Report showed private sector payrolls rose by 330,000 jobs in July, well short of the Bloomberg forecast calling for a 683,000 gain. June’s rise of 692,000 jobs was revised to a 680,000 increase. Today’s ADP data, which does not include government hiring and firing, comes ahead of Friday’s broader July nonfarm payroll report, expected to show headline employment grew by 875,000 jobs and private sector jobs rose by 718,000 after both figures surprised to the upside in June. The unemployment rate is forecasted to decline to 5.7% and average hourly earnings are projected to rise 0.3% month-over-month (m/m) and be up 3.9% y/y.

The MBA Mortgage Application Index fell by 1.7% last week, following the prior week’s 7.0% increase. The decline came as both the Refinance Index and the Purchase Index lost 1.7%. The average 30-year mortgage rate fell 4 basis points (bps) to 2.97%.

The July Institute for Supply Management (ISM) non-Manufacturing Indexshowed expansion in the key services sector (a reading above 50) accelerated to 64.1 from June’s 60.1 reading, and versus the Bloomberg consensus estimate of a slight increase to 60.5. The index posted its highest level on record dating back to when data began to be gathered back in 1997. The better-than-expected read came as growth in new orders and business activity both increased and remained north of 60, while employment jumped back to a level depicting expansion and new export orders jumped to 63.5 after flirting with falling below the key 50 level last month. Prices paid continued to suggest inflation pressures as the component hit 82.3, its highest level since September 2005. The ISM said, “The July reading indicates the 14th straight month of growth for the services sector, which has expanded for all but two of the last 138 months.”

The final Markit U.S. Services PMI Index for July was unexpectedly revised higher to 59.9 from the preliminary estimate of 59.8, where it was expected to remain. The index was also down from June’s 64.6 figure but well north of the 50.0 level a year ago. A reading above 50 denotes expansion. Markit’s release is independent and differs from the Institute for Supply Management’s (ISM) report, as it has less historic value and Markit weights its index components differently, while its survey respondents include those that vary more in size, including small and medium-sized companies.

Treasuries were mixed, as the yield on the 2-year note rose 1 basis point to 0.18%, the yield on the 10-year note was little changed at 1.17%, and the rate on the 30-year bond decreased 1 basis point to 1.83%.

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