U.S. Stock Market Indications Update - July 7, 2016: U.S. Stock Futures Pare Loses as ADP Overshadows Brexit
U.S. stock futures trimmed early losses Thursday after a duo of stronger-than-expected reports on the U.S. labor market helped assuage investors’ worries over Brexit, or Britain’s vote to exit the European Union.
Futures for the Dow Jones Industrial Average YMU6, -0.05% slipped 6 points, or less than 0.1%, to 17,828, while those for the S&P 500 index ESU6, -0.06% dropped one point to 2,093. Futures for the Nasdaq-100 index NQU6, +0.01% inched higher by a point to 4,441.
Analysts use ADP’s data to get a feeling for the Labor Department’s official jobs report, which will be released Friday and covers government jobs in addition to the private sector. The June employment report is viewed as a crucial gauge of the health of the economy after last month’s report showed that the U.S. created just 38,000 jobs in May—representing the slowest pace of growth in five years.
The most important question for the market is “whether last month’s disastrous number was an anomaly or a trend,” said J.J. Kinahan, chief strategist at TD Ameritrade.
The ADP report suggested the U.S. economy “is moving in the right direction,” Kinahan said, but it will take more than just one good report for the Federal Reserve to consider raising interest rates.
“The Brexit vote alone is likely to deter [the Fed] from raising rates until at least the end of the year as they wait to see what the knock-on effects will be, both from an economic and financial markets perspective,” Craig Erlam, senior market analyst at Oanda, said in a note.
On Wednesday, stocks rose for the first session after investors returned from the Independence Day holiday to Brexit-related losses on Tuesday. A stronger-than-expected report on nonmanufacturing activity and dovish Federal Reserve minuteshelped nudge investors back into equities on Wednesday. The S&P 500 DXY, -0.16% ended up 0.5%, while Dow industrials DJIA, +0.44% rose 0.4%.
Shares of SemiLEDS Corp.LEDS, +60.65% soared 58% ahead of the bell after the LED chips maker late Wednesday said Peter Chiou will buy 577,000 shares of the company’s common stock at $5.00 per share. SemiLEDS shares closed at $3.30 on Wednesday.