[Chart courtesy of MarketWatch.com]
U.S. equities closed the trading day higher, halting the longest slump this year for the Standard & Poor’s 500 Index, as investors welcomed a better-than-expected jobless report, which overshadowed concern that a budget impasse could hurt economic growth.
Meanwhile, Treasuries were mostly lower following the upbeat employment data, which was accompanied by an unrevised 2.5% rate of 2Q GDP growth, which neutralized disappointing pending home sales and regional manufacturing reports. The Dow and S&P 500 rose after five straight sessions of losses, while the Nasdaq closed just shy of a high last seen about 13 years ago.
Washington continues to attempt a timely resolution to U.S. fiscal issues as House Republicans refused to give in to President Barack Obama’s demands for straightforward bills to keep the government running beyond September 30 and to increase borrowing authority to avoid a historic default. Congress, struggling to avert a government shutdown next week, was warned by the Obama administration that the Treasury was quickly running out of funds to pay government bills and could soon face a damaging debt default.
Failure to increase the debt limit could lead to a downgrade of the U.S. government’s credit rating. The Office of Management and Budget estimated 30 days of shutdowns in 1995 and 1996 cost more than $1.4 billion, or $2.09 billion in today’s dollars.
In general, some of today’s price action resembled that of yesterday with the S&P making two unsuccessful runs at 1,700. However, unlike yesterday, the major averages ended in positive territory with the Nasdaq in the lead (+0.7%).
The tech-heavy index benefitted from the outperformance of biotech. Meanwhile, major traditional tech companies were mixed. The broader tech sector added 0.3%. Today’s performance of financials also marked a departure from yesterday as top components ended mixed.
Remaining cyclical sectors were mixed as energy (+0.1%) lagged; consumer discretionary (+0.9%) and materials outperformed (+0.6%); and industrials (+0.4%) ended in-line with the S&P.
Notably, the discretionary sector received support from apparel manufacturers with Nike rising 2.1% ahead of its quarterly earnings report, scheduled for an after-hours release. Even though equities posted gains, it was the final-hour rally that saved the market from ending on session lows.
Our Trend Tracking Indexes (TTIs) edged higher as well and ended as follows:
Domestic TTI: +3.58%
International TTI: +7.43%