4:15pm: Markets shake off early slump
The Dow closed Thursday up 435 points, 1.3%, at 33,248, the Nasdaq improved 322 points, 2.7%, to 12,317, while the S&P 500 added 76 points, 1.8%, to hit 4,177.
The major benchmarks each snapped two-day losing streaks.
“Bearish sentiment remains overdone, and a lot of the upcoming profit warnings should mostly be already priced in. Stocks should start to eventually push higher this summer as economic activity moderates,” said Edward Moya, senior analyst with OANDA, as reported by CNBC.
Palantir Technologies Inc was among the leaders, as its shares improved by nearly 10% to $9.90.
12:05pm: Volatile trading continues
US stocks inched into positive territory at noon on Thursday amid a choppy trading session.
At midday, the Dow had added 80 points at 32,892 points with the S&P 500 up 27 points at 4,128 points.
The tech-laded Nasdaq had also gained 160 points at 12,155 points.
Microsoft Corporation pared losses from earlier in the day following the lowering of its profit and revenue outlook, down about 1.5% at noon.
Meanwhile, Facebook’s parent company Meta Platforms Inc was up about 3.5% following the announcement yesterday that its COO Sheryl Sandberg would be stepping down after 14 years.
9.35am: US stocks slip at the open
US stocks have dipped slightly into the red at the open as investors eye the latest employment data which suggest payroll growth slowed in May.
At the open, the Dow had shed 61 points at 32,752 points.
The S&P 500 was down 11 points at 4,090 points and the Nasdaq was down 58 points at 11,936 points.
US payroll figures to be released tomorrow are likely to show that payroll growth has slowed as the ADP private payroll report released today showed just a 128,000 increase in May, coming in well below the consensus analyst expectation of 325,000.
Pantheon Macroeconomics chief economist Ian Shepherdson said the ADP data supported the firm’s below-consensus for tomorrow’s official number, but he noted that this measure was not a reliable indicator of the official payroll numbers.
“Accordingly, we are sticking with our Homebase-driven forecast that May payrolls rose by about 250,000,” he explained.
“That’s a clear slowing from the pace in recent months, likely due in part, at least, to the energy price shock triggered by the Ukraine War, but it is not a disaster.”
Meanwhile, initial weekly jobless claims for the week ended May 28th fell to 200,000 from 211,000, below the consensus expectation of 210,000.
Initial jobless claims have been rising slowly since the mid-March low but the trend remains very low by historical standards and consistent with solid payroll gains, Shepherdson noted.
“We expect claims to rise to about 220K over the next couple of weeks, and then we expect a period of volatility through early August as a result of seasonal adjustment problems due to the annual automakers’ retooling shutdowns," he said. "
They happen every year, but the timing and extent vary.”
6.30am: Muted open expected
US markets were expected to open little changed on Thursday after the chief executive of the largest bank in the United States issued a warning of significant economic headwinds on the horizon, adding to already weak sentiment.
Traders will also be keeping their eyes peeled on the ADP private employment and initial weekly jobless claims data due out today for the latest insights into the health of the US economy ahead of Friday's always-key May non-farm payrolls.
Futures for the Dow Jones Industrial Average rose 0.38% in pre-market trading, while those for the broader S&P 500 index gained 0.47%, and contracts for the Nasdaq-100 added 0.62%.
Overnight, Jamie Dimon, CEO of JP Morgan Chase & Co. warned that a “hurricane” is “coming our way” as the US economy struggles against a combination of challenges, including the war in Ukraine and a tighter domestic monetary policy.
“The sentiment is bearish among investors and traders as they have become even more cautious after JP Morgan’s cautionary note about the health of the US economy,” said Naeem Aslam, chief market analyst at avatrade.com.
“The thing is that if one of the biggest banks believes that economic headwinds are going to be extremely strong due to the ongoing conflict between Ukraine and Russia and soaring inflation … then surely other market participants have similar concerns and they are going to be more conservative,” he added.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said while the ADP report - often used as a preview to the Bureau of Labor Statistics’ monthly employment report due on the first Friday of every month – is important, she isn’t expecting any surprises.
“The US economy is expected to have added 300,000 new private jobs, which is a strong number if we go back to the pre-pandemic times. A lower-than-expected figure will hardly revive the Fed doves, while a positive read could boost the Fed hawks – and further dampen the market mood,” she added.
In energy markets, oil prices were lower, reversing recent gains, ahead of a key producers meeting later today and after Saudi Arabia said it is prepared to boost production as EU leaders plan more sanctions against Russia for its invasion on Ukraine.
“Previously, Saudi Arabia maintained its stance that the current oil supply is adequate, and more importantly, Saudi Arabia was also a firm supporter of Russia as an OPEC member,” Aslam said, noting there are now raised eyebrows as the kingdom appeared to have involved itself in the Russia/Ukraine conflict.
WTI crude oil futures fell 2.54% to $112.33 a barrel and Brent crude futures were 2.58% lower at $113.29.
Contact the author at jon.hopkins@proactiveinvestors.com