U.S. stock futures weakened Wednesday morning, after a report on private-sector jobs for July came in much weaker than expected, setting the stage for the monthly nonfarm-payrolls report on Friday to disappoint as investors assess the economy’s recovery from COVID-19 amid the spread of the delta variant.
How are stock benchmarks trading?
Dow Jones Industrial Average futures
slipped 118 points to 34,880, a decline of 0.3%.
S&P 500 futures
retreated 11.10, or 0.3%, at 4,403.75.
fell 1,25 point, or less than 0.1%, at 15,045.
On Tuesday, the Dow industrials
climbed 278.24 points, or 0.8%, to 35,116.40, the S&P 500
rose 35.99 points, or 0.8%, to a record close of 4,423.15 and the Nasdaq Composite
gained 80.23 points, or 0.6%, to 14,761.29.
What’s driving the market?
Stocks looked set to pull back from records put in on Tuesday for the S&P 500 index after a report on private-sector job creation in the U.S. tumbled in July, amid growing concerns about the spread of COVID-19’s delta variant.
The variant is now compelling many U.S. companies to require proof of vaccination as several parts of the country reinstate indoor mask rules. Some are also worried that a wave of delta infections could impact economic recoveries.
The ADP report showed that 330,000 jobs were added last month, missing consensus estimates of economists surveyed by Dow Jones for 653,000 and marking the smallest monthly gain since February. On top of that, the job tally for June was lowered to 680,000 from an initial reading of 692,000.
“The labor market recovery continues to exhibit uneven progress, but progress nonetheless,” wrote Nela Richardson, chief economist at ADP, in a statement. “July payroll data reports a marked slowdown from the second quarter pace in jobs growth.”
The private-sector jobs update comes ahead of Friday’s jobs-market report from the U.S. Labor Department where 845,000 jobs are anticipated and the unemployment rate is projected to fall to 5.7% from 5.9%.
The ADP report is seen as key to gauging how fast the labor market is working toward the Federal Reserve’s policy goal of “substantial” progress that could trigger a tapering of its bond-buying program, said Ipek Ozkardeskaya, senior analyst at Swissquote, in a note to clients.
If the Labor Department’s report falls short of expectations on Friday as well, the market could take it as a signal that the Fed will maintain its easy monetary policy for longer than previously expected. Fed Chairman Jerome Powell has cited labor-market weakness as the primary reason for continuing large-scale asset purchases and maintaining a near-zero fed-funds rate.
Fresh economic worries have also centered on China, which is testing all 11 million people in the city of Wuhan, the reported epicenter of the original outbreak a year and a half ago. A cluster of cases has also spread to Beijing, and the country has been imposing new travel restrictions.
Asian stocks saw a largely positive session, with technology stocks rebounding in Hong Kong after a selloff on Tuesday linked to concerns over potential more regulatory scrutiny, this time on gaming stocks.
Which companies are in focus?
shares slid 68% ahead of the open after the synthetic biology company reported troubles for its key product and said its chief executive would exit. The company made its public debut in April.
shares climbed 5% after the videogames maker’s results topped Wall Streetforecasts and executives pledged a “zero-tolerance harassment policy,” amid staff allegations of a sexist work environment.
Shares of Royal Caribbean Group RCL fell in premarket trading Wednesday, putting them on trackfor a seventh straight loss, after the cruise operator reported a wider-than-expected second-quarter loss and revenue that fell well below expectations, as cash burn increased from the previous quarter as additional ships returned into operation.
New York Times Co. shares NYT jumped in premarket trade Wednesday, after the newspaper group beat earnings estimates for the second quarter, as subscription and ad revenues gained.
Scotts Miracle-Gro Co. SMG shares rose in Wednesday premarket trading after the lawn and garden care company reported fiscal third-quarter earnings that beat expectations and announced an acquisition.
General Motors Co. GM reported Wednesday second-quarter earnings that beat expectations, as revenue more than doubled, and raises its full-year profit outlook, although that outlook remained below the FactSet consensus.
Tupperware Brands Corp. TUP stock rose in Wednesday premarket trading after the container and consumer products company reported second-quarter earnings that blew past estimates
How are other assets faring?
The yield on the 10-year Treasury note TMUBMUSD10Y was at 1.15%. Yields and debt prices move in opposite directions.
The ICE U.S. Dollar Index DXY, a measure of the currency against a basket of six major rivals, was flat but edging lower.