Stocks lost a bit of steam at the start of August as a rally that pushed the market up about 30 per cent from its lows spurred calls on a near-term pullback.

Just a few days ahead of the all-important jobs report, data suggested some softening in demand for workers in a still tight labor market. The numbers weren’t enough to entice investors, who also grappled with a mixed bag of corporate earnings. The S&P 500 finished the session with a loss of just 0.3 per cent. Bonds fell, with the 30-year yield hitting its highest since November as the Treasury prepares to ramp up issuance of longer-dated securities.

“Markets are starting August on the wrong foot, with investors concerned that incoming earnings reports may not yet reflect the cycle’s trough,” said Jose Torres at Interactive Brokers, who also cited a “seasonally unfriendly period for equities.”

Bank of America Corp. strategist Savita Subramanian noted there’s no reason to fret just yet even as everyone piles in.  BofA’s Sell Side Indicator — which tracks sell-side strategists’ recommended stock allocations — is still in neutral territory despite increased allocations and stands closer to a “buy” rather than a “sell” signal.

“Rising equity allocations and falling bond allocations mark a reversal from the bond love and equity hate that built during 2022,” Subramanian added.

Equities have come a long way in a short period of time, but looking at different time frames, the gains don’t look quite as impressive, according to Bespoke Investment Group. In the case of the S&P 500, over the last 12 months, it’s still up over 11 per cent, but on a two-year basis, performance looks much less attractive at just 4.4 per cent. 

“That hardly looks like a market that has become unanchored from reality,” Bespoke strategists wrote.

Oppenheimer Asset Management’s Chief Investment Strategist John Stoltzfus lifted his target on the S&P 500 index to a Street high, a day after Morgan Stanley’s Michael Wilson, one of the market’s leading doomsayers, sounded less bearish than usual. 

Stoltzfus now sees the S&P 500 index hitting 4,900 by the end of the year, leaving room for another 7 per cent gain. The target would mark a new record for the gauge, and one that plays out against bearish predictions by bigwigs such as Wilson, JPMorgan’s Marko Kolanovic and Bank of America Corp.’s Michael Hartnett. They were all blindsided by the resilience of the US economy and the sudden emergence of the artificial intelligence-driven tech rally.

Corporate Highlights:

• Tesla Inc. is the subject of another probe by US regulators, this time focusing on driver complaints about vehicles possibly at risk of losing control of steering. The shares fell.
• Uber Technologies Inc. reported its first-ever operating profit, but that milestone was eclipsed by a pace of growth that has decelerated from pandemic highs, sending the shares down the most in nine months.
• JetBlue Airways Corp. slashed its full-year profit forecast over signs of a slowdown in domestic demand, becoming the latest carrier to warn of a shift toward international routes and renewing questions about the durability of a post-pandemic surge in US travel.
• Norwegian Cruise Line Holdings Ltd. slipped after the company issued guidance for the third quarter that missed Wall Street’s expectations.
• Caterpillar Inc. shares soared to a record after the company defied concerns of a global economic slowdown by reporting a bigger-than-expected profit and resilient demand for its iconic yellow machinery.

Key events this week:

• China Caixin Services PMI, Thursday
• Eurozone S&P Global Eurozone Services PMI, PPI, Thursday
• Bank of England rate decision, Thursday
• US initial jobless claims, productivity, factory orders, ISM Services, Thursday
• Eurozone retail sales, Friday
• US unemployment rate, non-farm payrolls, Friday

Some of the main moves in markets:

Stocks

• The S&P 500 fell 0.3 per cent as of 4 p.m. New York time
• The Nasdaq 100 fell 0.2 per cent
• The Dow Jones Industrial Average rose 0.2 per cent
• The MSCI World index fell 0.5 per cent

Currencies

• The Bloomberg Dollar Spot Index rose 0.5 per cent
• The euro fell 0.1 per cent to US$1.0982
• The British pound fell 0.5 per cent to US$1.2773
• The Japanese yen fell 0.8 per cent to 143.40 per dollar

Cryptocurrencies

• Bitcoin rose 0.3 per cent to US$29,281.63
• Ether was little changed at US$1,851.93

Bonds

• The yield on 10-year Treasuries advanced seven basis points to 4.03 per cent
• Germany’s 10-year yield advanced six basis points to 2.56 per cent
• Britain’s 10-year yield advanced nine basis points to 4.40 per cent

Commodities

• West Texas Intermediate crude fell 0.2 per cent to US$81.67 a barrel
• Gold futures fell 1.3 per cent to US$1,982.30 an ounce