Stocks churned around the unchanged line on Wednesday as traders look ahead to Friday’s key non-farm payroll report, which in turn, will be one of the last data points the Federal Reserve will consider ahead of its hike/no-hike decision on Sept. 17.
In the end, the Dow Jones Industrial Average lost 0.1%, the S&P 500 gained 0.3%, the Nasdaq Composite gained 0.7% and the Russell 2000 gained 0.2%.
Treasury bonds were mostly weaker as bond traders increasingly realize Fed could be serious about a sooner, but more gradual, pace of policy tightening. Crude oil lost 1.3% to close at $45.13 a barrel after a 0.6% surge in production — the biggest since late May — eclipsed data showing the 11th inventory drawdown in the last 14 weeks.
That helped the ProShares Ultra Crude Oil (NYSEARCA:SCO) jump to a gain of nearly 60% since recommended to Edge subscribers on May 26.
Overnight disappointing with Walt Disney Co (NYSE:DIS) revenues and free cash flow caused the popular stock to slam down 9.2% — proving once again that the trend is your friend, until it isn’t. It was the worst one-day loss for the House of Mouse since 2011, taking shares back to mid-June levels. Investors were also worried by comments from executives on the conference call that TV subscribers were moving away from traditional cable packages, which is bad news for its ESPN business.
Another popular stock, Tesla Motors Inc (NASDAQ:TSLA), dropped more than 7% in after-hours trading (since closing the loss to around 2%) on smaller margins, fewer deliveries, and rapid cash burn. Revenues of $955 million also missed expectations of a $1.2 billion take.
First Solar, Inc. (NASDAQ:FSLR) gained 16.7% thanks to a big Q2 top- and bottom-line beat and strong fiscal year guidance. Online crafts seller Etsy Inc (NASDAQ:ETSY) lost 28.3% as growth slowed while comps are set to get more difficult.
On the economic front, the ADP private payrolls report came in at 185,000 for July, missing expectations of a 210,000 rise and down from the 229,000 revised gain in June. The number was greeted with a “bad news is good news” response as this was seen as casting a pall over Friday’s jobs report — which in turn could lead the Fed to delay its rate liftoff timing.
For now, the market remains in an uneasy stasis amid weakening breadth as fewer and fewer stocks keep the Dow from breaking down out of its year-long trading range.
Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters. Free two- and four-week trial offers have been extended to InvestorPlace readers.
