Stocks Close Down, Helpless Against Weak Jobs Number
Stocks closed mostly down Wednesday after a session spent battling against a disappointing jobs number.
Dow Jones Industrial Average
dropped 323 points, or 0.9%. The
was 0.45% lower, while the
The less-than-stellar employment figure was the increase in private-sector jobs for July. ADP reported a gain of 330,000, below the 653,000 expected. Hiring bottlenecks caused by the Covid-19 Delta variant weighed on the result, according to ADP.
The 10-year Treasury yield dropped to as low as 1.14% from 1.18%, after the ADP report, before ticking back up to 1.16%. The yield, which often moves up and down with expectations for inflation and economic growth, is currently signifying weakened confidence in economic growth. That dynamic is pressuring stocks, as it has all week.
The economic picture may not be dimming as much as the smaller increase in private-sector jobs indicates. ADP expects the hiring bottlenecks to clear out in the next few months.
While stocks were largely down Wednesday, the selling may not become exaggerated. “Equities should be range bound,” wrote NatAlliance Securities’ Andrew Brenner before the close.
The losses indeed may have been capped because investors want to see the government’s jobs report Friday before making conclusions about the current employment situation. Economists are expecting an increase of 845,000 nonfarm payrolls for July.
“We would caution anyone reading too much into this [ADP] report as we have a big week of jobs data that will create a more complete picture, and the ADP hasn’t exactly been the most reliable indicator throughout the pandemic,” writes Mike Loewengart, managing director of investment strategy at ETrade.
In Asia, Hong Kong’s
rose 0.9% while the
climbed 0.9% and Tokyo’s
fell 0.2%. The
in London was 0.3% higher as the pan-European
notched gains of 0.6%. The
in Paris moved 0.3% into the green and Frankfurt’s
Worries about Chinese regulatory crackdowns, which have intensified in the past few weeks across diverse sectors, appeared to temper as stocks in Hong Kong rose, after being rocked on Tuesday by fresh scrutiny—this time on the videogame sector.
The macro picture in markets remains largely unchanged, with inflationary pressures as well as the status of the Covid-19 pandemic and its impact across sectors in the spotlight.
“Concerns that rising infection rates across Asia, and in China especially, appear to be causing anxiety that the rebound story in that part of the world is about to become the weakest link in the global recovery story,” said Michael Hewson, an analyst at CMC Markets.
Also read: Why This Longtime Asia Investor Thinks the Reaction to China’s Crackdown Is Overblown
Investors are also paying attention to remarks by Federal Reserve Vice Chair Richard Clarida. He said inflation is more likely to beat his estimates than to fall below them.
On Monday, Fed governor Christopher Waller said the central bank should consider tapering its $120 billion-a-month asset purchases as soon as September.
(ticker: UAA) stock rose 5.1% after reporting a profit of 24 cents a share, beating estimates of 6 cents a share, on sales of $1.35 billion, above expectations for $1.21 billion.
(CVS) stock dropped 3% after reporting a profit of $2.42 a share, beating estimates of $2.06 a share, on sales of $72.6 billion, above expectations for $70.3 billion.
(GM) stock was falling 8.8% even after reporting a profit of $1.97 a share, beating estimates of $1.82 a share, on sales of $34.2 billion, above expectations for $29.9 billion.
(LYFT) stock fell 10.6% after reporting a loss of 5 cents a share, better than estimates for a 24 cent loss, on sales of $765 million, above expectations for $697 million.
Write to Jack Denton at [email protected]