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US shares end flat but dogged by data and lowly oil prices

Last updated: 18:09 01 Sep 2016 EDT, First published: 13:09 01 Sep 2016 EDT

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US shares closed flat on Thursday after clawing back from a session of losses fed by poorly local data and worries about the outlook for interest rates after Friday’s publication of the non-farm payrolls data.

The S&P 500 index closed at 2,170 while the S&P Midcap 400 ended down 0.1% at 1,563 and the S&P Smallcap 600 closed flat at 753.

The broader small-cap Russell 2000 index punched out some light gains, up 0.02% at 1,240.

As well as US productivity and PMI data which disappointed, weekly jobless claims came in lower than expected – fuelling concerns that Friday’s non-farm payrolls could come in stronger than expected, or at least strong enough to prompt the Federal Reserve to carry out its threat to raise interest rates as soon as at its Sept 21 meeting.

Meanwhile, oil prices continued to remove supports for the sickly bourse. The US oil benchmark WTI was down 3.5% at $43.16. 


Midsession

US shares fell at midsession on Thursday after a gauge of manufacturing unexpectedly contracted in August for the first time in six months and after the latest report showed productivity was weaker than initially thought.

The market bellwether S&P 500 index was 0.1% lower at 2,168, while the S&P Midcap 400 shed 0.2% to 1,561 and the S&P Smallcap 600 was also down 0.2% at 751.

Investors had a lot to digest on Thursday starting with US productivity which was weaker than initially thought in the second quarter and declined for the third straight quarter — raising questions about the health of the US economy and wage growth.

That was followed by a report from the Institute for Supply Management which showed that US manufacturing sector lost momentum last month. The purchasing manger’s index dropped to 49.4 in August from 52.6 the month prior. Moreover, the details of the report were ugly as well.

On a cheery note for the economy – but a shudder to investors anxious to avoid a labour market expansion to leads to a hike later this month – the US weekly jobless claims were 263,000, lower than 265,000 forecast. That means that less people claimed state aid for joblessness.

The data comes ahead of Friday’s non-farm payrolls data for August. A strong number is expected to force the hand of the Federal Reserve to hike rates on Sept 21, adding to the cost of credit for businesses.

The market was also depressed on account of a further cut in oil prices. The US oil benchmark West Texas Intermediate was down a further 3% - in line with the decline on Wednesday – at $43.38.

The biggest decline among small-caps was Genesco Inc (NYSE:GCO) which lost 31.3% to $49.92 after the clothes retailer reported underwhelming second quarter results.


Open

US shares started slightly higher before dipping on Thursday as traders mulled over data and looked towards tomorrow's jobs data.

It came as US weekly unemployment benefit claims came in at 263,000, which were slightly better than expectations.

The Dow Jones was down 0.10% at the time of writing, to 18,383, while the S&P500 fell 0.15% to 2,167.

The tech-heavy Nasdaq exchange added 0.6% to stand at 5,216.

Meanwhile, on the midcaps, the S&P MidCap 400 dropped 0.14% to 1,562; the SmallCap600  shed 0.22% to 751.43.

US crude was down 1.4% to stand at US$44.03 a barrel.

Cynapsus Therapeutics Inc (NASDAQ: CYNA) raced up over 116% as it and  Sunovion Pharmaceuticals Inc signed a definitive agreement under which Sunovion will acquire Cynapsus for US$40.50 per share in cash.

The transaction values Cynapsus at around US$624 million (or approximately C$820 million).


PREVIEW

Wall Street is set to start higher as traders eye the non-farm jobs stats tomorrow and as oil prices take a hit.

US crude - the West Texas Intermediate - dropped 0.22% to stand at US$44.60 per barrel.

In futures trading, the S&P500 is up three points, the tech heavy Nasdaq is over 12 to the good and the Dow Jones Industrial Index is 36 higher.

US stocks had a weak finish as the oil slide impacted on energy stocks.

The Dow Jones was down over 53 at 18,400; the Nasdaq shed almost ten at 5,213.

The S&P500 lost over five points at 2,170.

In pre-market today, Marathon Oil (NYSE:MRO) recovered over 2% to US$15.44 a share.

The job creation figure for August is keenly awaited as a clue to US economic policy.

It rose at company level rose about in line with expectations for the month, despite weakness in manufacturing and construction, according to the latest report from ADP and Moody's Analytics.

Companies added 177,000 positions for the month, just above Wall Street expectations for 175,000. So investors will await to see how the ADP report compares to  the public stats  tomorrow.

 

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