The three major indexes are slightly down for the week as news about the jobs report came this morning. This report bodes very well for the possibility of a Fed rate cut in two weeks. The majority of companies have finished their quarterly earnings announcements, and roughly 77% of S&P 500 companies beat estimates (slightly above the 10-year average). Small-cap stocks and value stocks outperformed in August, suggesting the rally is broadening. As we enter September, it is historically the weakest month for stocks with an average decline of 0.7%. However, this month may be different as a rate cut is expected.
The jobs report, released this morning, showed that hiring is slower than expected. While economists were expecting 76,500 newly added jobs in August, the US economy added only 22,000 jobs, and the unemployment rate rose from 4.2% to 4.3%. The August jobs report also had two revisions, showing that the US economy lost 13,000 jobs in June, while it revised its July job gains from 73,000 up to 79,000. According to some analysts, the reason for this stymying of hiring may be the economic uncertainty brought on by policy changes this year. Companies may be waiting to hire until more certainty is present, which is on the horizon as the Federal Reserve is likely to cut interest rates when it meets on September 16-17.
In corporate news, Google’s stock is up double-digits this week after a federal judge ruled that Google can keep its Chrome browser, but it will be barred from exclusive contracts. This antitrust trial started in September 2023, and it has concluded that Google can still make payments or offer other considerations to distribution partners for preloading or placement of Google Search, Chrome, or its GenAI products. The verdict is also great news for Apple, as Google pays Apple billions per year to be the default search engine on iPhones. In other news, Broadcom and DocuSign each had strong quarterly announcements, beating both revenue and earnings. American Eagle Outfitters has been in the headlines recently due to controversial advertising. However, it is paying off, as the company had a great quarter, and the stock responded very well.
In economic news, job opening data came out on Wednesday, and the Job Opening and Labor Turnover report showed roughly 7.18 million listings in July. This is below the economist’s expectations of 7.4 million openings. Weekly jobless claims increased a modest 8,000 to a seasonally adjusted 237,000. Layoffs have remained relatively low over the last few years, most likely due to the difficulties in finding labor during the 2020 pandemic, which has prompted businesses to retain more workers. Although layoffs remain low, this is offset by businesses not hiring as much due to economic uncertainty. The softened labor tone is also evident in the data, which shows an increase of 106,000 jobs in private employment in July and 54,000 jobs in August.
In closing, last Wednesday marked the 70th anniversary of the publication of the Guinness Book of World Records. In the last few weeks, there has been a spike in records broken, most likely due to the challenge that Guinness has offered. One of the more painful records broken was the fastest 100 meters barefoot on Lego bricks. After two months of training, Gabrielle Wall of New Zealand set a record in this excruciating race, with a 100-meter time running on 661 pounds of Legos in 24.75 seconds. Another record was set last week, this time in China, by buying a tiny precocious pet parrot. This light green parrot, Xiaogui, was able to pick colored straw balls and place them into color corresponding bins in under 33.5 seconds, securing his first Guinness World Record for the fastest time to identify 10 colors by a parrot. In a more meaningful pursuit, last weekend, a Georgia nonprofit earned a Guinness World Record by playing kickball for 52 consecutive hours. In the process of breaking the record, they were able to raise more than $200,000 for charitable purposes, showing that even inconsequential records can have a large impact.