U.S. stocks were indicated higher Wednesday morning, even after a report on private-sector employment in August came in below forecasts, ahead of Friday’s monthly government jobs report that is expected to inform the timing of the Federal Reserve’s reduction of bond purchases that helped to support financial markets during the pandemic.
What are major indexes doing?
Dow industrials futures
rose 90 points, or 0.3%, to 35,429.
S&P 500 futures
gained 15 points, or 0.3%, to 4,535.50.
rose 55.75 points, or 0.4%, to reach 15,638.25.
On Tuesday, the Dow Jones Industrial Average
fell 39 points, or 0.1%, to 35,360, in line with the S&P 500
which fell 0.1% to 4,522.68 and the Nasdaq
which closed just below flat at 15,259.24.
What’s driving the market?
The gain in private sector jobs in August was weaker than expected in ADP data published Wednesday, but that might be a good thing for a market that is anxious about the start of the end of easy-money policies that have been credited as a key source of record-setting prices for stocks and other assets.
On Wednesday, the private sector report on employment from Automatic Data Processing showed an increase in August of 374,000 jobs, far weaker than the 600,000 forecast by economists surveyed by The Wall Street Journal. On top of that, July’s rise in jobs was revised down to 326,000 from 330,000.
To be sure, the ADP report has a poor record month-to-month in signaling results for the Labor Department’s more closely followed nonfarm payrolls. However, the data does raise some questions about the health of the jobs market in the midst of the spread of the coronavirus delta variant in some states.
“The relatively muted 374,000 increase in the ADP measure of private employment in August would appear to suggest that the recent surge in virus cases is weighing on the economy,” wrote Andrew Hunter, senior U.S. economist at Capital Economics, following the private-sector data.
The weak data in jobs comes after China’s Caixin manufacturing purchasing managers index, or PMIs, for August confirmed Tuesday’s official figures to show that Chinese factory activity contracted last month. Data from seven Southeast Asian countries in the ASEAN bloc also showed that manufacturing activity contracted for the first time since May 2020.
“That rounds out a grim week for China’s PMIs as Covid-19 lockdowns and the same supply chain challenges the rest of the world is experiencing erode economic performance,” said Jeffrey Halley, an analyst at broker OANDA.
Looking ahead, investors will now watch for U.S. IHS Markit data on manufacturing due at 9:45 a.m., followed by the Institute for Supply Management’s manufacturing index at 10 a.m. ET. A report on U.S. construction spending for July will be released the same time as ISM’s reading.
In other news, market participants may keep on eye on a meeting between the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, including Russia and Saudi Arabia, which are meeting to discuss output plans.
How are other markets faring?
London’s FTSE 100
was 0.9% higher, while the pan-European Stoxx 600
increased 0.7%; in Paris, the CAC 40
ticked up 1% and Frankfurt’s DAX
moved 0.5% into the green.
Oil prices were marginally higher, with international benchmark Brent
crude ticking up near 0.5%, approaching $72 a barrel.