U.S. Stocks Mixed After Strong Jobs Report

Weekly Wrap Content for the week of Aug 5:

1. Week 31 major indexes performance;

2. Week 31 US sector indexes performance;

3. Major indexes weekly charts of support and resistance levels;

*Contents/Data including information from various public market reports

U.S

For the week ended Aug 5, U.S stocks were mixed as a much stronger-than-expected jobs report revived investor concerns that the Federal Reserve will need to maintain an aggressive pace of interest rate hikes to tamp down high inflation. The Nasdaq Composite. Russell 2000, and S&P 500 Index finished with gains, while the Dow Jones Industrial Average recorded negative results. Equity markets continued to receive support from above-consensus corporate earnings reports. Refer to major indexes’ weekly performance tables below.

Key highlights for the week and outlook:

1.    Job market still strong. Friday’s payrolls report from the Labor Department showed employers added 528,000 nonfarm jobs in July, more than double consensus expectations of around 250,000, and May and June estimates were revised up by a combined 28,000. Following the strong July gains, total nonfarm employment in the U.S. has now returned to its pre-pandemic level. The unemployment rate fell to 3.5%, matching its February 2020 level. 

2.    Treasury Yields Increase. The strong payroll report and hawkish messaging from Fed officials helped drive U.S. Treasury yields higher over the week, outweighing downward pressure from rising U.S.-China tensions following House Speaker Nancy Pelosi’s visit to Taiwan.

SPX sectors in play

Six out of 11 sectors in the S&P 500 recorded gains in the week. Big cap growth stocks outperformed. Tech(XLK), Communication Services(XLC) and Consumer Discretionary(XLY) were among top sectors gainers. While Energy(XLE) lagged. Refer to below sector indexes weekly performance table.

Technically Nasdaq and SPX recorded 3^rd weekly gains while Dow eased after two weeks gains.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China’s stock markets eased as geopolitical tensions, mortgage boycotts, and tepid economic data kept buyers on the sidelines. The broad, capitalization-weighted Shanghai Composite Index(SSE weekly Chart) fell 0.8% and the blue chip CSI 300 Index, which tracks the largest listed companies in Shanghai and Shenzhen, fell 0.3%.

U.S. House of Representatives Speaker Nancy Pelosi’s trip to Taiwan infuriated Beijing, which held live-fire drills in the waters around the self-ruled island and imposed sanctions on Pelosi and her immediate family. Chinese chipmakers’ shares jumped as traders bet that the government would increase support for the domestic semiconductor industry at a time when the U.S. is ramping up efforts to curb China’s rise in chip manufacturing. Last week, the U.S. Congress passed the CHIPS and Science Act, which aims to prop up the U.S. semiconductor industry and contains restrictions on chip firms considering expanding in China.

On the economy front, the official manufacturing purchasing managers’ index (PMI) fell to 49.0 in July from 50.2 in June, below the 50-point mark that separates contraction from growth and the lowest in three months. The non-manufacturing business activity index fell to 53.8 from 54.7 in June and the composite PMI, which includes manufacturing and services, fell to 52.5 from 54.1.

Hang Seng index(.HSI weekly chart) edged higher on close after spiked down intra-week new low since May 13.  Technically, the index appears still weak below both its 20 and 50dma.

Singapore

STI index (STI weekly chart) advanced 3rd consecutive week. Technically, the index closed up every day this week, led by banking stocks. Immediate next target (resistance) 3300, and downside support at 3235- its 200dma level.