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FX.co ★ U.S. Stocks Seeing Modest Weakness After Early Volatility

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typeContent_19130:::2024-10-03T16:17:00

U.S. Stocks Seeing Modest Weakness After Early Volatility

In an early session on Thursday, the stock market displayed a lack of clear direction, ultimately showing slight declines throughout the trading day. This decrease has effectively erased the minor gains from the previous day. As of now, the major indices are recovering from their session lows, yet remain in negative territory. The Dow Jones Industrial Average has decreased by 240.97 points or 0.6%, settling at 41,955.55. Meanwhile, the Nasdaq has slipped by 39.55 points or 0.2%, reaching 17,885.57, and the S&P 500 has dropped by 17.55 points or 0.3%, standing at 5,691.99.

This mild downturn on Wall Street follows the release of a report by the Institute for Supply Management. The report highlights that U.S. service sector activity surged to its highest level in over a year in September. Specifically, the ISM's services PMI rose to 54.9 in September, up from 51.5 in August, with any reading above 50 indicating expansion. Economists had anticipated a more modest increase to 51.7. The September figure marks the highest level since reaching 55.0 back in February 2023.

While the data indicates ongoing economic vigor, it has simultaneously tempered the optimism regarding the Federal Reserve aggressively reducing interest rates in the coming months. The report also noted an uptick in the prices index to 59.4 in September from 57.3 in August, signaling an acceleration in price growth.

Additionally, market participants are keenly awaiting Friday's release of the Labor Department's closely monitored monthly employment report. Economists predict that the report will reveal an increase of 140,000 jobs in September, following a rise of 142,000 jobs in August. The unemployment rate is expected to hold steady at 4.2%.

These forthcoming employment figures could influence the economic outlook and expectations surrounding the Federal Reserve's future rate adjustments. With the anticipation of jobs data, the CME Group's FedWatch Tool currently shows a 67.0% likelihood that the Fed will reduce rates by a quarter point and a 32.9% chance of a half-point cut.

Ahead of the more critical monthly employment report, the Labor Department published a report this morning showing a rise in initial claims for U.S. unemployment benefits for the week ending September 28. The initial jobless claims increased to 225,000 last week, a rise of 6,000 from the prior week's revised figure of 219,000. Economists had projected an increase to 220,000 from the initially reported 218,000 for the previous week. This larger-than-expected rebound comes a week after jobless claims reached their lowest level since hitting 216,000 in the week ending May 18.

**Sector Developments**

Gold stocks have experienced a significant decline, pushing the NYSE Arca Gold Bugs Index down by 2.5%, despite a modest rise in gold prices. There is also notable weakness among airline stocks, as seen by a 1.5% drop in the NYSE Arca Airline Index. On the other hand, sectors such as networking, steel, and housing are showing notable strength. Energy stocks have moved upward amid a sharp increase in crude oil prices.

**Global Markets Overview**

In Asian markets, the stock exchanges in the Asia-Pacific region had a mixed performance on Thursday. Japan's Nikkei 225 Index surged by 2.0%, while Hong Kong's Hang Seng Index declined by 1.5%. Over in Europe, major markets have generally trended downward for the day. France's CAC 40 Index has dropped by 1.5%, Germany's DAX Index is down by 1.0%, and the U.K.'s FTSE 100 Index has fallen by 0.2%.

In the bond market, treasuries are facing selling pressure, with the yield on the benchmark ten-year note rising by 4.5 basis points to 3.830%.

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