By Chibuike Oguh
NEW YORK (Reuters) – The benchmark index and the Dow ended lower in volatile trading on Thursday after a short-lived boost from a string of economic reports faded and investors looked ahead to key jobs data on Friday. The Nasdaq edged higher.
Markets were on edge ahead of the release of full nonfarm payrolls data, which will likely set the stage for the Federal Reserve to begin cutting rates later this month.
Earlier in the session, Wall Street’s major indexes advanced as reports helped ease concerns about a deteriorating labor market. The Institute for Supply Management survey showed service sector activity expanded in August, while jobless claims declined last week, according to Labor Department data.
“Markets have been on this risk-aversion roller coaster because they’re watching the data, as the Fed has said ‘we’re going to watch the data,'” said Wasif Latif, president and chief investment officer at Sarmaya Partners in Princeton, New Jersey.
“The market is looking to the data to get a sense of what the economy looks like in terms of the landing scenario and what that means for the Fed’s interest rate policy.”
September has been historically weak for U.S. stocks, with the S&P 500 down about 1.2% for the month on average since 1928. The index is down more than 2% so far this week and technology stocks are down more than 4%.
In August, U.S. private employers hired the fewest workers since January 2021 and data from the prior month was revised downward, potentially signaling a sharp slowdown in the labor market, according to ADP’s National Employment Report.
“The market wants some softness in the data, but it’s like a narrow path because, in our view, the equity market is priced in for a soft landing or no landing scenario, while the bond market, given rate cut expectations, is a bit more priced in for a recession,” Latif added.
According to preliminary data, the S&P 500 lost 16.39 points, or 0.30%, to close at 5,503.68, while the Nasdaq Composite gained 42.15 points, or 0.25%, to close at 17,126.45. The Dow Jones Industrial Average fell 222.05 points, or 0.54%, to close at 40,752.92.
Tesla (NASDAQ:) gained after the electric vehicle maker said it will launch its advanced driver-assistance software with full self-driving in the first quarter of next year in Europe and China, pending regulatory approval.
Frontier Communications (OTC:) fell sharply after Verizon (NYSE:) said it would buy the company in an all-cash deal worth $20 billion. Verizon shares fell.
JetBlue Airways (NASDAQ:) rose after the airline raised its third-quarter revenue forecast.