- NASDAQ Composite rallies as Alphabet surges over 8% to new all-time high.
- Most Dow Jones stocks are in decline as Factory Orders fell 1.3% in July.
- JOLTS Job Openings for July also showed a notable downtrend.
- Markets look ahead with worries over Friday’s Nonfarm Payrolls for August.
The NASDAQ Composite (IXIC) holds onto a 0.76% gain on Wednesday morning following Alphabet (GOOGL) winning an antitrust court case that will allow it to keep paying Apple (AAPL) for prominence on the iPhone, driving up the latter’s share price as well.
Meanwhile, despite Apple’s 2.75% advance, most Dow Jones Industrial Average (DJIA) stocks are trading starkly lower, especially following a bout of poor economic indicators.
Factory Orders in July slumped -1.3%, which was slightly better than the consensus and better than June’s -4.8% reading. JOLTS Job Openings for July also underwhelmed, with 7.181 million openings, below a consensus figure of 7.4 million. The June JOLTS figure was also revised lower by 80K.
This sent investors streaming into US Treasuries, which has pushed 10-Year and 30-Year yields down over 1% following Tuesday’s spike.
The mid-week market is mixed as economy dims
For now, the market has opted to forget about tariff uncertainty that initially sent equities lower on Tuesday. A federal appeals court called the Trump administration’s unilateral institution of import tariffs unconstitutional, arguing the mainstream perception that only the US Congress has the power to set tariffs.
For now, the tariffs remain in place, but further courts will take up the case in October and later in the year, which could end up forcing the Trump administration to raise hundreds of billions of dollars to pay back previously collected tariffs to importers. This possibility could end up pushing Treasury yields much higher, coming on the back of existing large deficits.
This reticence has clashed with Alphabet’s more than 8% rally after winning a court case against the government, in which prosecutors sought to make it divest its Chrome browser. Instead, Judge Amit Mehta ruled that Alphabet must share search data with its competitors. Additionally, it would be allowed to continue paying Apple for the $20-plus billion privilege of being the default search engine on iPhones.
The JOLTS data suggests that the July Nonfarm Payrolls report, which drastically lowered earlier projections of US hiring, was correct directionally. A slowing jobs market in the US acquires yet another data point.
Torsten Slok, the chief economist for Apollo Global Management, released an investor note with further doom and gloom this week. Slok says that consumer sentiment surrounding job prospects typically foreshadows job market downturns, and this is what he is watching play out. Second, a growing cohort of US small businesses is seeing sales decline in the middle part of the year.
“The bottom line is that sentiment indicators are suggesting that the labor market will continue to weaken,” Slok said, adding that Friday’s Nonfarm Payrolls report might fall below his prior 90K estimate.
That Friday release is already sending shivers down the market’s spine after what happened in early August when the July NFP showed a 73K figure. The FXStreet consensus for August is 75K.
Of course, a poor NFP would supply the Federal Reserve (Fed) with more reason to cut interest rates at its next meeting in September. But many observers are noting that interest rate cuts late last year did not push longer-dated Treasury yields lower.
NASDAQ, Alphabet charts
After the gap down on Tuesday, NASDAQ is returning to near its recent all-time highs. This current bull rally that began in April has a history of finding optimistic news, like the conclusion of Alphabet’s long-running court case, to pull bulls back in after nervous sessions.
The index no longer looks poised to break its 50-day Simple Moving Average (SMA).
NASDAQ Composite daily chart
As for Alphabet, analysts are calling this the largest non-earnings gap up in its share price since 2006. GOOGL reached a new all-time high at $230.85 early in the session, but it may conquer that level before the day is out.
GOOGL daily stock chart
