[New York Stock Market] Slightly Lower Ahead of Employment Report... Nasdaq Down 0.12%

The three major indices of the U.S. New York stock market closed lower on the 5th (local time), trading near flat ahead of the employment report release, which could impact the Federal Reserve's (Fed) monetary policy.

On the New York Stock Exchange (NYSE) that day, the blue-chip-focused Dow Jones Industrial Average closed at 33,119.57, down 9.98 points (0.03%) from the previous session. The large-cap S&P 500 index fell 5.56 points (0.13%) to 4,258.19, and the tech-heavy Nasdaq index dropped 16.18 points (0.12%) to 13,219.83.

Within the S&P 500, real estate, healthcare, financials, and technology sectors rose, while consumer staples, materials, utilities, and energy sectors declined. Electric vehicle maker Rivian fell 22.88% following the announcement of a large convertible bond issuance plan. Lucid, which unveiled a new car, also saw a decline of over 7%. Clorox dropped more than 5% due to weak guidance and Raymond James downgrading its investment rating. ExxonMobil experienced a decline of over 2%. Amazon, Google Alphabet, and Tesla closed slightly lower.

[Image source=Reuters Yonhap News]

Investors showed caution while awaiting the employment report to be released the next day, closely monitoring Treasury yields and economic indicators. The ADP private employment data released the previous day fell short of expectations, drawing attention to whether this trend will continue in the employment report on the 6th. Currently, Wall Street expects nonfarm payrolls for September to increase by 160,000 to 170,000, showing a slowdown compared to the previous month. The direction of the unemployment rate, which hit a high of 3.7% in August?the highest since February 2022?is also considered a key factor.

The U.S. unemployment data released that day fell short of expectations, reaffirming a stronger-than-expected labor market. According to the U.S. Department of Labor, initial jobless claims last week rose by 2,000 to 207,000, below Wall Street's forecast of 210,000.

Economic media CNBC reported, "The weekly unemployment data disappointed some investors who hoped it would indicate cracks in the labor market," adding, "Investors do not want a recession but are hoping for labor market weakness that would cause the Fed to reconsider rate hikes and halt the rise in Treasury yields." Since the Fed has identified below-trend low growth and labor market slowdown as essential conditions for achieving its inflation target, if employment data continue to show stronger-than-expected strength, concerns about tightening are likely to increase further.

Additionally, according to the Challenger, Gray & Christmas (CG&C) layoff report, planned layoffs in September totaled 47,457. This represents a 37% decrease from the previous month but a 58% increase compared to one year ago.

Jeremy Siegel, a professor at the University of Pennsylvania's Wharton School, appeared on CNBC's Closing Bell that day and said the Fed's rate hike campaign must end. While pointing out economic uncertainties such as the possibility of a federal government shutdown and an auto workers' union strike, he assessed that the real economy remains solid. Scott Radner, Chief Investment Officer at Horizon Investments, described it as "a transition from a low-interest-rate environment," adding, "This adjustment period is a difficult time."

The market largely expects a rate hold in November. According to the Chicago Mercantile Exchange (CME) FedWatch tool, as of that morning, federal funds futures reflected more than an 80% probability that the Fed will hold rates steady in November. The probability of a baby step (0.25 percentage point rate hike) was around 19%. The remaining FOMC meetings this year are in November and December.

In the New York bond market, the 10-year U.S. Treasury yield fell to around 4.71% as investors awaited the employment report. The 2-year yield, sensitive to monetary policy, traded near 5.02%, and the 30-year yield hovered around 4.89%.

The dollar index, which measures the value of the U.S. dollar against six major currencies, dropped more than 0.4% to 106.3. The Chicago Board Options Exchange (CBOE) Volatility Index (VIX), known as Wall Street's "fear gauge," stood at 18.4.

Oil prices fell for the second consecutive trading day. On the New York Mercantile Exchange, November delivery West Texas Intermediate (WTI) crude oil closed at $82.31 per barrel, down $1.91 (2.27%) from the previous session. This closing price was the lowest since August 30. The decline is interpreted as a result of demand concerns and profit-taking selling pressure.