Following the significant decline observed in the previous session, stocks may exhibit a lack of clear direction as trading begins on Wednesday. Current indications suggest a nearly flat market opening, with S&P 500 futures marginally down by under a tenth of a percent.
Investors may hesitate to make bold moves due to the prevailing uncertainty surrounding interest rates, spurred by the release of mixed U.S. employment data.
Payroll processor ADP has reported a slower-than-anticipated growth in private sector employment for December, while the Labor Department revealed an unexpected fall in weekly jobless claims, hitting their lowest point in nearly eleven months.
According to ADP, private sector jobs increased by 122,000 in December after a rise of 146,000 in November, falling short of economists' expectations for a 140,000-job growth. The slowdown in hiring was observed across various industries, with a continued decline in manufacturing employment for the third consecutive month.
ADP Chief Economist Nela Richardson stated, "The labor market eased to a more moderate growth rate in the final month of 2024, marked by declines in both hiring and wage increases."
Concurrently, the Labor Department reported a modest and unexpected reduction in the first-time claims for U.S. unemployment benefits for the week ending January 4th. Initial jobless claims decreased to 201,000, down 10,000 from the prior week’s unrevised figure of 211,000, contrary to economists’ predictions of a rise to 218,000. This dip placed jobless claims at their lowest level since February 17, 2004, when they reached 200,000.
The Labor Department is slated to release its closely monitored monthly jobs report on Friday, potentially providing further insight into the labor market’s strength.
Later, the Federal Reserve will publish the minutes from its most recent monetary policy meeting, offering additional perspective on the potential direction of interest rates.
On Tuesday, stocks initially moved higher but experienced a sharp decline as the trading day progressed, with major indices reversing to negative territory, led by the technology-focused Nasdaq.
Although the major averages recovered somewhat from their lowest points by the close, they all ended significantly lower. The Nasdaq fell 375.30 points, or 1.9%, to 19,489.68; the S&P 500 dropped 66.35 points, or 1.1%, to 5,909.03; and the Dow decreased 178.20 points, or 0.4%, to 42,528.36.
Internationally, stock markets in the Asia-Pacific region showed mixed results on Wednesday. Japan's Nikkei 225 Index fell by 0.3%, and Hong Kong's Hang Seng Index fell by 0.9%, whereas South Korea's Kospi increased by 1.2%.
In Europe, major markets followed a downward trend. France's CAC 40 Index dropped by 1.0%, the U.K.'s FTSE 100 Index declined by 0.5%, and Germany's DAX Index fell by 0.2%.
In commodities, crude oil futures are rising by $0.28 to $74.53 per barrel, building on a $0.69 gain to $74.25 per barrel on Tuesday. Meanwhile, gold is trading at $1,670.40 per ounce, up $5 from the previous session’s close of $1,665.40, after an $18 jump on Tuesday.
In currency markets, the U.S. dollar is trading at 158.27 yen, up from Tuesday's close of 158.05 yen. Against the euro, the dollar is trading at $1.0295, compared to $1.0340 on the previous day.
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