Mark DeCambre, Sara SjolinU.S. stock futuresedged lower on Wednesday, following a report of monthly private-sector employment that came in slightly better than Wall Street expectations, potentially adding more reasons for the Federal Reserve to follow through with talk of lifting interest rates.
The U.S. economy added 177,000 private-sector jobs in August, compared with average estimates from economists polled by MarketWatch of 175,000. And, the prior month’s private-payroll report was raised to 194,000 from 179,000.
The ADP data have arguably worked as a precursor for the more closely watched nonfarm-payrolls report out on Friday, but it hasn’t always been an accurate gauge.
Futures for the Dow Jones Industrial Average YMU6, -0.15% slipped 23 points, or 0.1%, to 18,420 while those for the S&P 500 ESU6, -0.15% slipped 2.20 point, or 0.1%, to 2,173.00. Futures for the Nasdaq-100 index NQU6, -0.13% edged 5.25 points, 0.1%, lower to 4,771.00.
“U.S. [stock-market] index futures have eased back a little on the back of the slightly stronger-than-expected ADP data. This has raised the prospects we will see a stronger official employment report on Friday, which could then lead to an earlier rate rise from the Fed,” said Fawad Razaqzada, technical analyst at Forex.com.
The dollar gained slightly against the yen USDJPY, +0.42% and was up 0.2%, as measured by the ICE U.S. Dollar Index DXY, +0.12% after the ADP data.
Some analysts said the report did little to change the narrative or raise expectations for a rate increase in September.
“The U.S. market has been limited so far as [the ADP report is] not enough of a surprise to change Fed expectations for September,” Colin Cieszynski, chief market strategist at CMC Markets.
Wednesday’s action comes after similar small moves on Tuesday, when investors weighed comments from Fed Vice Chairman Stanley Fischer about the timing of the next policy move. The S&P 500 index SPX, -0.20% closed down 0.2%, while the Dow average DJIA, -0.26% ended off 0.3%.
Looking ahead, investors will be focused on the Friday nonfarm-payrolls report, which has been one of the most crucial pieces of data the policy-setting Federal Open Market Committee looks at to the determine the timing and pace of rate hikes.
Economic news: Next on deck for investors is, the Chicago purchasing managers index for August, out at 9:45 a.m. Eastern Time, and a reading on pending-homes sales for July, out at 10 a.m. Eastern.
“Traders may now turn to Chicago PMI later this morning, Manufacturing PMI tomorrow or nonfarm payrolls on Friday to keep the FOMC pot boiling.
In Fed news, Boston Fed President Eric Rosengren and Chicago Fed President Charles Evans both appeared at an event in Shanghai, China, and showed both sides of the Fed debate over raising interest rates.