PrefBlog

TXPR closed at 608.03, down 0.55% on the day. Volume today was 1.52-million, below the median of the past 21 trading days.

CPD closed at 12.08, down 0.74% on the day. Volume was 47,070, near the median of the past 21 trading days.

ZPR closed at 10.27, down 1.34% on the day. Volume was 220,840, second-highest of the past 21 trading days.

Five-year Canada yields were down to 2.92%.

Jobs, jobs … whoopsee!:

American employers reined in their hiring significantly in July, intensifying jitters that the economy is cooling faster than expected.

Payrolls grew by 114,000, the Labor Department reported on Friday, the second smallest gain in a 43-month period of consistent job growth. The unemployment rate rose to 4.3 percent, the highest level since October 2021, when anxiety about the pandemic was still elevated.
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Wage growth decelerated in July, with average hourly earnings up 0.2 percent from the previous month and 3.6 percent from a year earlier. The number of people working part time who would have preferred full-time employment also increased, while the number of hours worked per week ticked down slightly, both signals that the demand for workers is slackening.

Further underscoring weakness in the report, job growth was concentrated in a handful of sectors, including health care and social assistance, and construction, which has been surprisingly resilient despite high interest rates. Government employment, which had been helping to drive recent job gains, also increased, though at a slower pace than earlier this year.

But many other industries were largely flat or lost employment, including the information sector, which cut 20,000 jobs.

Overall, the private sector added fewer than 100,000 jobs. The total payroll figures for May and June were also revised lower by 29,000 jobs, bringing the labor market’s steady slowdown into sharper focus.

The market effect of this may have been exacerbated by the high profile trouble at Intel:

Intel INTC-Q -26.06%decrease
was set to erase nearly $25 billion in market value on Friday in what would be its worst selloff since 2000 after it suspended its dividend and slashed its workforce to fund a costly turnaround for its chip-making business.

Shares of the company were down about 20% in premarket trading after Intel late on Thursday forecast quarterly revenue below estimates and said it was cutting 15% of its workforce, raising worries about its ability to catch up to Taiwan’s TSMC and other chipmakers it has fallen behind in recent years.

The Santa Clara company was once the world’s leading chipmaker, with the “Intel Inside” logo a valuable marketing feature on personal computers in the 1980s and 90s.

Part of the dot-com era’s Four Horsemen – along with Cisco Systems, Microsoft and Dell – Intel’s stock market value peaked at nearly $500 billion in 2000 before slumping in that year’s market selloff and never fully recovering.

It continued to dominate in hefty PC chips, but was caught off foot by the launch of Apple’s iPhone in 2007 and other mobile devices that demanded lower power and less pricey processors.

If Friday’s losses hold, Intel’s market capitalization would fall to about $100 billion, equivalent to less than 5% of Nvidia’s and about 40% of Advanced Micro Devices’, the two PC chipmakers it heavily dominated for decades until recently.

So, yeah, we saw market reaction out the wazoo:

The U.S. two-year Treasury yield – which is particularly sensitive to Federal Reserve monetary policy – has plunged half a percentage point since just this past Wednesday, marking its largest weekly decline since March 2023. Both Canada’s two-year and five-year bond yields fell to their lowest in more than two years, signaling further downward pressure on fixed mortgage rates.
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Traders are now pricing in reasonable odds that both the U.S. Federal Reserve and the Bank of Canada may need to cut rates by more than 25 basis points at upcoming meetings.

The U.S. rate futures market is pricing in a 73% chance of a 50 basis point cut at the Fed’s September meeting, up from 20% late on Thursday, according to LSEG calculations. The market has also priced in about 120 bps of easing this year, from 75 bps on Thursday.

The Bank of Canada has already cut its trend-setting overnight rate by a quarter of a percentage point twice this year. Overnight index swap markets are now pricing in 100% odds of at least a further quarter point cut at the bank’s next policy meeting on Sept. 4, and about 27% odds that it could be a larger 50 basis point cut, according to LSEG data.
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On Friday, Canada’s main stock index posted its biggest decline in six months, as resource and technology shares paced a broad-based selloff. The S&P/TSX composite index ended down 495.58 points, or 2.2%, at 22,227.63.

The index has pulled back 3.8% since notching on Wednesday a record closing high at 23,110.81. For the week, the index was down 2.6%, after five straight weekly gains.
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The Dow Jones Industrial Average fell 610.71 points, or 1.51%, to 39,737.26, the S&P 500 lost 100.12 points, or 1.84%, to 5,346.56 and the Nasdaq Composite lost 417.98 points, or 2.43%, to 16,776.16.

Adding downward pressure was drop in Amazon, down 8.79%, and Intel, which plunged 26.06% after their quarterly results and disappointing forecasts.