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What’s happening: US stocks closed lower on Friday following the release of the nonfarm payrolls (NFP) report for July.
What happened: While NFP data released on Friday came in below expectations, disappointing earnings reports from Apple also weighed on Wall Street stocks.
All three major indices fell on Friday and recorded weekly losses as well.
Why it matters: The overall trading session remained choppy on Friday. US stocks climbed in early trading, but pared gains later in the session.
The Labor Department said that US employers added 187,000 jobs in July, higher than the 185,000 job adds in June. However, the figure came in lower than market estimates of 200,000 job adds.
Average hourly earnings rose 0.4% for July, unchanged versus the earlier month, but surpassing market estimates.
Shares of Apple fell around 4.8% on Friday, representing its biggest daily percentage decline since September 29, 2022. Apple’s shares negatively impacted the S&P 500 index by around 16 points, after the company reported results for the latest quarter and projected continued decline in sales.
Strength in Amazon’s stock lent some support to the benchmark index, after the company reported upbeat quarterly results and issued strong projections for the third quarter. The rise in Amazon’s stock had a positive impact of 11 points on the S&P 500.
Out of the 422 S&P 500 companies that have reported quarterly results so far, around 79% have topped market estimates.
The Dow Jones plunged 150.27 points, or 0.43%, to close at 35,065.62 on Friday, while the S&P 500 fell 0.53% to settle at 4,478.03 and the Nasdaq 100 shed 0.51% to close at 15,274.92.
All three major indices recorded losses last week, with the S&P recording its biggest weekly percentage decline since March, as investors took profits after the index climbed for five straight months. On the week, the Dow fell 1.1%, while the S&P 500 lost 2.3%.
What to watch: With no major economic reports due on Monday, investors await data on balance of trade and wholesale inventories on Tuesday. The US trade gap, which narrowed to $69 billion in May, is expected to shrink to $65.1 billion in June. Analysts expect wholesale inventories in the US to decline by 0.3% in June.
Context: The CAD/USD forex pair edged lower on Friday as investors digested July’s jobs data.
Details: The CAD/USD forex pair fell to around a two-month low on Friday, as signs of softening in the jobs market lowered prospects of further rate hikes by the Bank of Canada.
The Canadian economy lost 6,400 jobs in July, compared to market expectations of an addition of 21,100 jobs. The figure was also significantly lower than the 59,900 job adds in the previous month. The jobless rate increased to 5.5%, from 5.4% in the prior month.
Meanwhile, the Ivey Purchasing Managers Index in Canada declined to 48.6 in July, from 50.2 in the previous month and came in much lower than market estimates of 52.7.
The rise in prices of crude oil, one of Canada’s major exports, failed to provide a boost to the loonie on Friday. WTI crude oil futures gained 1.6% to settle at $82.82 per barrel.
The CAD/USD slipped around 0.13% to 1.3372 on Friday, after hitting its lowest level since June 7 at 1.3393. For the week, the forex pair lost around 0.9%, recording its third weekly decline in a row.
Canadian stocks rose on Friday, after recording losses for three days, with the S&P/TSX Composite Index adding 0.57% to settle at 20,236.04.
What are expectations: Traders await economic data on balance of trade from Canada on Tuesday. Canada had recorded a trade deficit of C$3.44 billion in May and is expected to report a surplus of C$0.41 billion in June. Analysts expect exports from Canada to rise to C$64.7 billion in June, from C$61.5 billion in May, while imports are projected to decline to C$64.3 billion, from $64.97 billion in the previous month.
Other Markets: European indices closed higher on Friday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index up by 0.47%, 0.37%, 0.75% and 0.29%, respectively.
Russia launched a massive missile and drone attack after Ukraine’s drones hit a Russian tanker. The news sent the safe-haven US dollar index higher this morning.
Australia’s job advertisements rose by 0.4% in July, topping market expectations of 0.1% growth, which lent support to the AUD/USD forex pair.
Colombia’s producer prices fell by 6.55% year-over-year in July, versus a 3.65% decline in the prior month, sending the COP/USD pair higher in forex trading this morning.
China recorded a current account surplus of $146.8 billion in the first six months of the year. Although the surplus under trade in goods came in at $293.3 billion, China recorded a deficit under trade in services of $102.1 billion, which exerted pressure on the CNY/USD forex pair.
Japan’s reserve assets rose slightly to $1.254 trillion in July 2023, from $1.247 trillion in the previous month, sending the JPY/USD pair lower in forex trading this morning.
Germany’s industrial production, South Africa’s foreign exchange reserves, UK’s Halifax house price index, France’s foreign exchange reserves, Singapore’s foreign exchange reserves, Mexico’s consumer confidence, Brazil’s total production of cars, new vehicle registrations and Central Bank of Brazil focus market readout, Russia’s foreign exchange reserves, Turkey’s treasury cash balance, China’s foreign exchange reserves, Spain’s consumer confidence indicator, as well as US Manheim used vehicle value index and consumer credit.
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