Disappointing Jobs Data May Weigh on US Stocks
By Investors Hub
major U.S. index futures are pointing to a lower opening on Thursday on the heels of the release of a report from payroll processor ADP showing weaker than expected private sector job growth in the month of June.
Geopolitical concerns may also weigh on the markets, although traders may be somewhat reluctant to make any significant moves ahead of the release of the Labor Department’s closely watched monthly jobs report on Friday.
Following the fourth of July holiday on Tuesday, stocks turned in a lackluster performance during trading on Wednesday.
While the Dow edged down 1.10 points or less than a tenth of a percent to 21,478.17, the Nasdaq climbed 40.80 points or 0.7 percent to 6,150.86 and the S&P 500 rose 3.53 points or 0.2 percent to 2,432.54.
The choppiness on Wall Street came as many traders remained away from their desks after the markets were closed yesterday.
The Federal Reserve plans to reduce their bloated balance sheet but failed to provide a specific timeline to begin the process, the minutes of the June Federal Open Market Committee meeting showed.
“Several” policy makers were in favor of starting the reduction of its $4.5 trillion balance sheet within a “couple of months.”
The market consensus is toward a start in September, which would likely push another interest rate hike to the end of the year despite the Fed’s optimism that stubbornly weak inflation will pick up.
“The information reviewed for the June 13-14 meeting showed that labor market conditions continued to strengthen in recent months and suggested that real gross domestic product (GDP) was expanding at a faster pace in the second quarter than in the first quarter,” the minutes read.
Since that meeting, final GDP figures for the first quarter showed economic growth was better than expected.
The Fed’s forecast for consumer price inflation was revised down slightly for 2017 but the projection was little changed thereafter, as the recent weakness in inflation was viewed as transitory.
Inflation on a 12-month basis was expected to remain somewhat below 2 percent in the near term, but almost all members expected it to stabilize around 2 percent over the medium term.
Regarding interest rates, the Fed said, “Economic conditions would evolve in a manner that would warrant gradual increases in the federal funds rate.”
A report from the Commerce Department showed new orders for U.S. manufactured goods fell by more than expected in the month of May.
The Commerce Department said factory orders slumped by 0.8 percent to $464.9 billion in May after falling by a revised 0.3 percent in April.
Economists had expected factory orders to drop by 0.5 percent compared to the 0.2 percent decrease originally reported for the previous month.
Energy stocks saw substantial weakness amid a steep drop by the price of crude oil, while significant strength was visible among biotechnology, semiconductor, and gold stocks.
