Share gains from Boeing Co., helped to buoy the Dow Jones index Thursday afternoon following data on U.S. manufacturing sector that came in weaker than expected, and as a recessionary signal in the bond market flashed red, putting pressure on the broader market.
Investors were also focusing on the annual Federal Reserve symposium in Jackson Hole, Wyo., where Fed officials were providing more insight about coming monetary policy after minutes from the Fed’s July 30-31 meeting offered few surprises and suggest that policy makers want to remain flexible.
How are the major benchmarks faring?
The Dow Jones Industrial Average DJIA, +0.25% rose 103 points or 0.4%, at 26,304, powered in large part by 4.5% gain in shares of Boeing. Meanwhile, the S&P 500 SPX, +0.02% picked up 4 points, or 0.1%, to 2,928, while the Nasdaq Composite index COMP, -0.25% edged 12 points lower to 8,008, a decline of 0.2%.
All three benchmarks were trading off their worst levels of the session, with the Dow at one moment falling by as many as 186 points.
On Wednesday, the Dow DJIA, +0.25% rose 240.29 points, or 0.9%, to 26,202.73, the S&P 500 index SPX, +0.02% climbed 23.92 points, or 0.8%, to 2,924.43, while the Nasdaq Composite Index COMP, -0.25% climbed 71.65 points, or 0.9%, to 8,020.21.
Read: Stocks say the consumer isn’t as strong as government data suggests
What’s driving the market?
Shares of Boeing Co. BA, +4.35% were rallying after a positive note from analyst Cai von Rumohr, said the Federal Aviation Administration certification flight for the embattled 737 MAX plane could be four or six weeks away, a boon to the aeronautics and defense contractor which has been under pressure since that fleet was grounded worldwide back in March following a pair of fatal crashes.
Boeing’s stock advance was adding more than 100 points to the price-weighted Dow industrials.
However, markets were still jittery after the yield on the 10-year U.S. Treasury note TMUBMUSD10Y, +1.28% briefly rose above that of the 2-year Treasury note TMUBMUSD02Y, +2.33%, for the third time this week. This so-called inversion of the yield curve is seen as an accurate predictor of recessions.
The move in the bond market occurred after IHS Markit issued its latest purchasing manager’s index readings for the U.S. manufacturing sector which showed factory activity slipping into contraction territory with a reading of 49.9 in August, from 50.4 in July, to a 10 year low, while the services sector slowed to 50.9 in August from 53.0 in July, a 3-month low.
“You had a couple things helping drive markets lower this morning,” Mike O’Rourke, chief market strategist at Jones Trading told MarketWatch. “You have the yield curve inversion, the yuan weakening again overnight and at 9:45 we had the manufacturing print that missed estimates and was below 50,” he said.
“At the same time you had [Philadelphia Fed President Patrick] Harker saying that he didn’t see the need for more easing,’ O’Rourke added. Harker and Kansas City Fed President Ester George each said during interviews on CNBC from the Jackson Hole summit that they wanted to keep rates steady for the time being.
The annual gathering kicked off Thursday, where Fed officials convene with academics and foreign central bankers in the Grand Teton mountains in Wyoming to discuss the economic outlook. Fed Chairman Jerome Powell will deliver a closely watched speech on the challenges facing monetary policy at 10 a.m. Eastern Time on Friday.
More bullish was data from the Conference Board, which reported Thursday that its leading economic indicators index rose 0.5 percent in July to 112.2, while data on new applications for unemployment benefits fell by 12,000 to 209,000 during the week ended Aug 17, a four-week low, suggesting continued strength in the labor market.
Jackson Hole comes after minutes of the Fed’s July meeting published Wednesday showed policy makers believed that “it was important to maintain optionality in setting policy.” The rate-setting Federal Open Market Committee voted 8 to 2 to lower its target for short-term interest rates by 25 basis points to 2%-2.25%, marking its first such rate reduction in more than a decade.
“We already knew that last months Fed rate cut was likely to be a contentious decision, given the differing views that were already being voiced in the lead-up to the decision,” wrote Michael Hewson, chief market analyst at CMC Markets, in a daily research note.
“Yesterday’s release of the minutes only served to confirm that view, and while Fed [Chairman] Jay Powell pushed the line that the reduction was a “mid-cycle adjustment” policy makers were sharply split on the course of action to take,” he wrote.
The European Central Bank, meanwhile, hinted at a significant new stimulus package after the release of minutes from its July 25 meeting, which suggested that policy makers are contemplating a package that would includes cutting policy rates further into negative territory and new purchases of financial assets.
Which stocks are in focus?
Nordstrom Inc. JWN, +16.20% issued second-quarter financial results Wednesday after the close, beating Wall Street expectations for sales and earnings, though it slightly lowered its outlook for the full year. The retailer’s stock rose 13% Thursday.
Mastercard Inc. MA, -0.34% could be in focus after it said it was investigating a data breach of a loyalty program in Germany, which compromised personal information. Shares were down 0.4%
Shares of L Brands Inc. LB, -4.14% fell 4.9%, after the Victoria-Secret parent issued second-quarter results Wednesday evening that fell short of Wall Street expectations.
Shares of Hormel Foods Corp. HRL, +4.36% gained 4.3% after the meat producer released fiscal third-quarter results Thursday morning.
Shares of BJ’s Wholesale Club Holdings Inc. BJ, +15.74% rallied 16.6% Thursday, after the wholesale retailer reported second-quarter earnings that beat expectations, while same-store sales growth matched expectations.
Splunk Inc. SPLK, -7.78% also issued earnings after the close of trade Wednesday, beating analyst expectations for adjusted earnings. The cyber security firm also announced a $1.05 billion acquisition of cloud monitoring company SingalFX. Shares were down 9.2%.
How are other markets trading?
Stocks in Asia traded mixed overnight, as China’s CSI 300 000300, +0.31% edged up 0.3%, Hong Kong’s Hang Seng Index HSI, -0.84% retreated 0.8% and Japan’s Nikkei 225 NIK, +0.05% inched up less than 0.1%.
In Europe, stocks traded mostly lower, with the Stoxx Europe 600 SXXP, -0.40% down 0.6%.
In commodities markets, the price of U.S. crude oil CLV19, -0.63% was falling along with gold prices GCZ19, -0.45% . The U.S. dollar DXY, -0.13% edged lower against its major counterparts.