[New York Stock Market] Mixed Close Amid Labor Market Cooling... August Employment Report Is Key

US August Private Employment Growth Hits 3.5-Year Low
Unemployment Claims Decrease, Indicators Diverge
Focus on August Nonfarm Payroll Report to Be Released on 6th
Tesla Rises 4.9% on Early Next Year FSD Launch in China and Europe

The three major indices of the U.S. New York Stock Exchange closed mixed on the 5th (local time) within a narrow range. Investors remained cautious about the cooling labor market as private employment increased at the slowest pace in three and a half years last month, and awaited the release of the 'August Employment Report' scheduled for the following day.

On that day, the Dow Jones Industrial Average, centered on blue-chip stocks, closed at 40,755.75, down 219.22 points (0.54%) from the previous trading day. The S&P 500, focused on large-cap stocks, fell 16.66 points (0.3%) to 5,503.41, while the tech-heavy Nasdaq rose 43.37 points (0.25%) to close at 17,127.66.

In the morning, another signal indicating a slowdown in the U.S. labor market was confirmed. According to ADP, a private labor market research firm, private sector job additions in August increased by 99,000, the lowest since January 2021. This figure was below both the forecast (144,000) and the previous month (111,000). Following the U.S. Department of Labor's announcement the previous day that job openings in July hit a 3.5-year low at 7.673 million, indicators of labor market cooling were confirmed for two consecutive days.

Nela Richardson, ADP's Chief Economist, analyzed, "The downturn in the employment market has led to a slower-than-normal pace of hiring after tremendous growth over the past two years," adding, "The next key indicator to watch is wage growth, which has stabilized after a dramatic decline following the COVID-19 pandemic."

However, last week's initial jobless claims decreased, showing somewhat mixed employment indicators. Initial jobless claims for the week of August 25-31 totaled 227,000, below both the revised figure for the previous week (232,000) and the forecast (231,000). Continuing claims, which count those claiming unemployment benefits for at least two weeks, stood at 1.838 million for the week of August 18-24, also below the revised previous week's figure (1.86 million) and market expectations (1.87 million).

A more accurate picture of the U.S. labor market will be revealed in the August nonfarm payroll report released by the U.S. Department of Labor on the 6th. Experts predict that nonfarm payrolls increased by 165,000 last month, with the unemployment rate at 4.2%. If nonfarm payrolls fall below 100,000 or the unemployment rate rises above 4.4-4.5%, the Federal Reserve (Fed) is expected to consider a significant rate cut.

Mark Malek, Chief Investment Officer (CIO) at Seabert Financial, said, "If tomorrow's employment report deviates significantly from expectations, we could see quite a large move in either direction (up or down)," adding, "Volatility is expected to increase if there is a discrepancy from the forecast."

Chris Larkin, Head of Trading at Morgan Stanley eTrade, commented, "After today's mixed indicators, the employment report to be released the next day will provide investors with a clearer picture of the labor market situation," and analyzed, "The market is trying to determine whether the economy is slowing down too much or if the Fed is falling behind."

Due to the slowdown in private employment indicators, bond yields are falling. The U.S. 10-year Treasury yield, a global benchmark for bond yields, dropped 3 basis points (1 bp = 0.01 percentage points) from the previous trading day to 3.73%, while the 2-year Treasury yield fell 2 basis points to 3.74%.

By individual stocks, Tesla rose 4.9%. Tesla stimulated investor sentiment by announcing the launch of a Full Self-Driving (FSD) support program in Europe and China in the first quarter of 2025. Additionally, former U.S. President Donald Trump, the Republican presidential candidate, officially confirmed the establishment of a government efficiency committee led by Tesla CEO Elon Musk if re-elected, which also acted as a positive factor. Frontier Communications fell 9.51% on news of being acquired by Verizon. JetBlue rose 7.16% after raising its third-quarter earnings guidance. U.S. Steel rebounded 2.01% after plunging 17.47% the previous day on reports that the Biden administration would block the sale of Nippon Steel.

International oil prices fell slightly to their lowest level in 14 months. West Texas Intermediate (WTI) crude closed at $69.15 per barrel, down $0.05 (0.1%) from the previous trading day, while Brent crude, the global oil price benchmark, closed at $72.69 per barrel, down $0.01 (less than 0.1%). Concerns over weakening demand in the U.S. and China offset expectations of declining U.S. crude inventories.