The stock market hit five-week lows on Thursday as jobless claims fell, signaling a tight job market. Productivity and manufacturing also fell, setting off red flags. Nasdaq led losses among major indexes, with tech stocks leading the downside.
The Nasdaq composite has lost 2% while the S&P 500 is down 1% at this hour. The Dow Jones Industrial Average has slid 0.4% while the small-cap Russell 2000 index is trading 2.3% lower.
Volume rose on the Nasdaq and NYSE vs. the same time on Monday, signaling growing stress ahead of Friday's nonfarm payrolls report.
The 10-year U.S. Treasury yield rose sharply, topping 3.25%. Yields are now challenging their June 21 highs, when they hit 3.28%.
Crude oil prices have fallen 2.5% to $87.27 per barrel. The S&P Energy Select Sector ETF is among the worst-performing sectors Thursday, dropping 2.4%.
The Innovator IBD 50 ETF has plunged 4.2%.
Jobless Claims Fall, Adding To Rate Fears
Initial jobless claims fell by 5,000 to 232,000 for the week ended Aug. 27, well below the Econoday consensus of a rise in jobless claims to 246,000. The shortfall indicates continued strength in the labor market, fueling concerns the Fed will increase rates this month.
Productivity decreased 4.1% in the business sector in the second quarter while manufacturing rose 4.7%.
"Overall, the August ISM manufacturing survey couldn't be better for those in the softish-landing camp," said Jeffrey Roach, Chief Economist for LPL Financial. "Prices paid in August fell to the lowest since June 2020. As supply chains continue to improve, we will likely see more easing in prices."
The S&P Global U.S. Manufacturing PMI (Purchasing Managers Index) fell to the lowest level since July 2020. August's reading of 51.5 indicates that new orders fell for the third straight month.
Markets now see a 76% chance of a 75-basis-point hike in September vs. a 24% likelihood the Fed will boost rates by 50 basis points, according to the Cboe Fed Funds Watch tool.
Stock market defensive play Campbell Soup fell than 3% after reporting earnings and sales that were in line with analyst estimates.
The soup maker reported higher prices that boosted revenue, but sales volumes continued to shrink. Campbell posted a profit of 52 cents per share in the fiscal fourth quarter, compared with 55 cents per share in the same period last year.
The company had climbed above a buy point off a cup-with-handle base on Aug. 11 and held those gains until today, when it dropped below the 5% buy zone.
Stock Market Today: Tech Stocks Downward Spiral
IBD 50 leader Clearfield plunged nearly 12% from highs that were already sharply extended. With the market uptrend under pressure, taking partial profits is justified. The telecom fiber-optics maker has risen as much as 87% above the 200-day moving average. IBD research finds that when a market leader rises 100% above the 200-day line, a serious correction is typically overdue.
Shares of Apple fell after IDC research showed a lower global 2022 smartphone outlook. The report said Apple's high-end market will be more resilient but slowing growth and high average selling price will pressure profits.
Apple fell below its 50-day line after dipping below its 200-day line in Tuesday's stock market. The next catalyst for Apple stock could be its fall launch event, scheduled for Sept. 7.
Analysts believe that Apple will introduce the iPhone 14 series smartphones and Apple Watch Series 8 watches at that time.
Microsoft, Tesla and Amazon suffered declines of more than 2%.
MongoDB suggested a slowdown in its second-quarter earnings report, sending the stock plummeting. The database software company reported revenue of $303.7 million, topping estimates of $284.4 million, driven by strong subscription revenue growth.
It reported an adjusted loss of 23 cents per share vs. expectations for a 28-cent loss. Subscription revenue hit $291.6 million, an increase of 52% year over year.
MongoDB also provided third-quarter revenue guidance in the range of $300 million to $303 million, below analyst estimates of $306.3 million, according to FactSet.
Follow Michael Molinski on Twitter @IMmolinski
