4:15pm: Choppy day of trading ends sour
The Dow closed Wednesday down 280 points, 0.9%, at 31,511, the Nasdaq Composite lost 67 points, 0.6%, to 11,816 and the S&P 500 dropped 31 points, 0.8%, to 3,955.
The benchmarks spent time on both sides of the flatline but trended lower as the session went on and ultimately lost ground for the fourth consecutive day. For the month of August, the three major indices all fell more than 4%.
It's a familiar refrain, but investors are still grappling with a Federal Reserve likely to continue aggressively raising interest rates.
“Markets were counting on limited rate increases and quick rate cuts,” said Brad McMillan, chief investment officer for Commonwealth Financial Network, according to CNBC. “The speech was clear, however, that the increases will be larger, and the cuts more delayed, than anyone expected.”
12.05pm: US stocks turn green midday
The major US indices had popped into the green around midday, following data showing job openings unexpectedly rose to 11.2 million in July, but ADP private payrolls grew by just 132,000 in August.
The Dow Jones Industrial Average was up 0.1% to 31,797 the S&P 500 was up by 0.2% at 3,992, while the Nasdaq Composite was also up by 0.2% at 11,912.
Ian Shepherdson, chief economist at Pantheon Macroeconomic noted that the revamped ADP private payroll report was better than the old ADP "but still not necessarily a reliable indicator.”
“ADP reports a 132,000 increase in private payrolls, above the ‘consensus’, 300,000. We put ‘consensus’ in quotes because ADP had released no historical data for its new methodology, so forecasts were based on … nothing,” said Shepherdson.
He noted that ADP’s new method undershot the official number by a hefty 203,000, following a mere 1,000 undershoot in June.
“ADP also now reports on wage growth, which it puts at 7.2% year-over-year in August, and stable. That’s well above the official rate of increase in average hourly earnings, 5.2% in July,” Shepherson added.
At midday, the major movers included Baidu, up by 5.5%, despite news US regulators put the Chinese internet and communications company on an audit inspection list. As well, Pinduoduo was up by almost 5% and Meta Platforms was up by 4.5%.
On the downside, the markets felt the weight of technology, energy and big retailers. Calvin Klein and Tommy Hilfiger brand owner PVH slid by almost 9%, despite 2Q earnings beating analyst estimates. Also, Hewlett-Packard was down by 5.8% and Crowdstrike fell 5.5%.
10.55am: Proactive North America headlines:
Bed Bath & Beyond plunges as cash-strapped retailer announces raft of measures, including store closures, job cuts and a stock offering
SpaceX partners with Royal Caribbean to provide high-speed internet
Animoca Brands and Temasek join forces on latest blockchain-based funding round
Stifel GMP upbeat on Mongolia-focused Steppe Gold following ATO Phase 2 expansion plan update
Todos Medical inks lease deal on botanical supplement manufacturing facility in Texas to produce Tollovid
Bloom Health Partners closes in on full year revenue target with strong fiscal 3Q results
Aftermath Silver reports exciting final assay results from diamond drilling at Berenguela silver-copper-manganese asset in Peru
American Resources sells exclusive rights to carbon nanostructure and graphene patents; takes over management of Novusterr
Irwin Naturals inks licensing deal to produce and distribute its THC products in Michigan
Guardforce AI makes bold executive team shakeup as it moves to grow its robotics solutions business
Mindset Pharma expands IP portfolio with three non-tryptamine families of next-gen psychedelic compounds
Silver Range Resources says set to option Bellehelen silver-gold project in Nevada to private BC company
PyroGenesis Canada announces upcoming on-site powder production audit by tier-one global aerospace company
Ridgeline Minerals provides exploration update on Nevada and Idaho projects
Adastra Holdings receives controlled drug and substances dealer's license, positioning it for future growth
Snap plans to lay off a fifth of its staff - report
Willow Biosciences provides update on CBG, the first commercialized functional ingredient in its portfolio
Kontrol Technologies inks new C$50M credit agreement to streamline balance sheet and aid future acquisitions
Bhang partners with Hoodie Analytics to streamline sales insights and strategies
American Manganese highlights CO2 emission reducing potential of RecycLiCo process
Kimberly Clark agrees to buy hydrogen energy for UK Andrex and Kleenex factory
Russia stops flow of gas via Nord Stream pipeline into Europe
PlantX Life hosts additional live retail events in Chicago to drive store traffic, introduce plant-based lifestyle
Solstice Gold closes its upsized private placement financing for gross proceeds of approximately $2.7M
9.35am: Employment data indicates hiring slowdown
US stocks opened mixed after three days of sell-offs as new employment data has suggested hiring slowed in August.
Just after the open, the Dow Jones Industrial Average had dipped 44 points at 31,747 points, while the S&P 500 was flat at 3,987 points, and the Nasdaq Composite had added 47 points at 11,929 points.
Meme stock Bed Bath & Beyond Inc sank about 23% after the embattled retailer revealed its plans to issue more stock, close 150 stores, and cut 20% of its staff.
On the other hand, Snap Inc stock was up about 4% after reports the company also plans to lay off 20% of its workforce.
Meanwhile, non-farm private payrolls grew by just 132,000 in August according to the ADP’s monthly payroll report.
This figure comes in far below the analyst consensus according to Bloomberg of 300,000 and the 270,000 jobs added in July, indicating a slowing in hiring during the month.
However, Pantheon Macroeconomics chief economist Ian Shepherdson noted that the ADP’s revamped measure was not necessarily a reliable indicator of employment.
“It seems to be better than the old one, probably,” he said. “We can’t say for sure because it’s not clear if the historical data using the new method are the initial estimates which would have been released at the time, or if they have been revised for late returns or updated seasonal factors.”
“We’re sticking to our forecast that private payrolls rose by 350,000, based on the strong Homebase data for the official survey week.”
Looking at the week ahead, AJ Bell investment director Russ Mould said all eyes would now be on Thursday’s manufacturing data as Tuesday’s batch of economic data may have eased fears of a recession, as consumer confidence rebounded and house prices stayed firm.
“The Institute for Supply Management’s purchasing managers’ index (PMI) for manufacturing is on a long losing streak that goes back to March 2021 and behind the headlines, the order number is looking weak, too,” he said.
“Another softer set of readings will only serve to highlight the US Federal Reserve’s dilemma, as it looks to fight inflation on one hand without crashing the world’s largest economy on the other.”
6.30am: More volatility
US stocks were expected to open mixed on Wednesday amid solidifying expectations that interest rates in the world’s biggest economy will continue to climb, crimping economic growth in the process.
Futures for the Dow Jones Industrial Average were down around 0.1% in pre-market trading, while those for the S&P 500 were flat, and contracts for the Nasdaq 100 added 0.4%.
Stocks have been tumbling since US Federal Reserve chairman Jerome Powell warned on Friday that rate-setters will take the fight to inflation to return it to the 2% target level. His words have since been echoed by other rate-setters and US economic data has come out on the positive side, strengthening the case for more aggressive rate increases and adding to market volatility.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, noted that stocks retreated quickly yesterday after stronger-than-expected US economic data, citing data on job openings which spiked above 11 million.
That reminded investors that the US jobs market remains extremely tight, and there are about two jobs waiting for each unemployed worker, she said.
“Second, the US consumer confidence index jumped in August, which was higher than the most optimistic of the forecasts on a Reuters survey. Improved confidence also means that households could be tempted to spend more money, which goes against the Fed’s will to cool down demand, and ease inflation. So, the latter also boosted the Fed hawks,” she added.
Given the level of volatility in the market, the ADP private sector jobs report due at 8.15am ET today will come in for scrutiny.
“Due today, the ADP report will be one of the key data that investors will be watching in the US. The US economy is expected to have added 200,000 new private jobs in August. A stronger-than-expected figure has the power to boost the Fed hawks - as we saw at yesterday’s session, and increase the bearish pressure on equities,” noted Ozkardeskaya.
“A softer-than-expected figure will, however, do little to bring in the Fed doves, given that the Fed wants a tighter jobs market, and it will only be happy to see the number of job additions cool down,” she added.
With that in mind, the monthly US non-farm payrolls figure, due on Friday, takes on even more importance than usual. Consensus estimates suggest another strong increase of around 300,000 in August, having risen over 500,000 in July.
Stocks have been unable to weather rate hike expectations since Powell’s hawkish stance on Friday. Meanwhile, New York Federal Reserve President John Williams said on Tuesday that the US central bank's hawkish position is unlikely to change anytime soon. Atlanta Fed President, Raphael Bostic, and Cleveland Fed President, Loretta Mester, both have speaking engagements today. If they echo Powell’s tough talk, equities could come under more selling pressure.
Contact the author at jon.hopkins@proactiveinvestors.com