US close: Stocks swing into the red after data barrage

US stocks gave up early gains on Thursday after a host of mixed economic data, with the S&P 500 ending August with its first monthly loss since February.

Despite a positive start to the trading session, markets swung into the red by midday as the indicators on the labour market and consumer spending started trickling in.

Following four straight days of gains, the S&P 500 fell 0.2% to 4,508 by the closing bell; the Dow Jones Industrial Average finished 0.5% lower at 34,722; while the Nasdaq finished with a modest 0.1% gain to 14,035 – helped by some better-than-expected earnings in the tech sector.

Following the data barrage, economists on the whole still expect the Federal Reserve to hold interest rates steady at its next meeting in September, with only modest increases in inflation likely to deter them from tightening monetary policy again too soon.

As Fed chair Jerome Powell expressed last week, the central bank is taking a data-dependent approach to its decisions and will act "cautiously" in regards to a further rate hike.

Another raft of economic indicators are on the schedule for Friday, with the all-important US non-farm payroll data to steal the headlines. Non-farm payrolls are predicted to show a softening in job creation to 170,000 in August, from 187,000 the previous month.

Busy day for data

US consumer spending rose more than expected and inflation picked up slightly in July, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) in current dollar terms rose 0.8% in July, picking up from a revised 0.6% increase seen in June. Economists had pencilled in a figure of 0.5%.

The core PCE price index, which strips out volatile items like food and energy, rose just 0.2% after a 0.2% the previous month and in line with expectations. This was the lowest back-to-back increases in the measure since late-2020.

The BEA also reported that personal incomes rose 0.2% in July, after a 0.3% gain the previous month, while disposable incomes were unchanged after growing 0.2% previously.

Meanwhile, initial weekly jobless claims came in at 228,000 last week, down from a revised 232,000 the week before and missing the 235,000 forecast.

Lastly, the Chicago purchasing managers index, a closely watched business barometer, jumped from 42.8 to 48.7. Any number below 50 represents a contraction in activity, but analysts were expecting a smaller rise to 44.1.

Tech stocks jump, retailers tank

Tech stocks were performing well after a host of earnings reported after the closing bell on Wednesday. Digital identity management firm Okta, CRM software group Salesforce and cybersecurity firm CrowdStrike all gained after beating second-quarter forecasts and giving bullish outlooks for coming quarters.

Meanwhile, retailers Dollar General, Chewy and Five Below were out of favour after reporting their quarterly results. However, Victoria's Secret was bucking the retail trend with strong gains after its second-quarter results – even though figures missed expectations and its future guidance disappointed.