Wall Street pulls back on weak jobs data

BOSTON -Wall Street started Wednesday in a pessimistic mood after data showed that U.S. jobs growth slowed in July, helping pull stocks and oil prices down, with Treasuries flat.

U.S. private payrolls increased far less than expected in July, likely constrained by shortages of workers and raw materials. Employers added 330,000 jobs last month, the ADP National Employment Report showed on Wednesday, versus an increase of 695,000 forecast by economists polled by Reuters.

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The Dow Jones Industrial Average fell 151.96 points, or 0.43per cent, to 34,964.44, the S&P 500 lost 10.65 points, or 0.24per cent, to 4,412.5 and the Nasdaq Composite added 3.64 points, or 0.02per cent, to 14,764.94.

“The market is surprising resilient given the weak ADP numbers and a bond market apparently signaling slower growth ahead,” said Nancy Tengler, chief investment officer of Nashville-based asset manager Laffer Tengler Investments.

She pointed to the positive growth indicators from manufacturing inventories and demand for services, but cited concern over COVID in China and related economic slow-downs.

MSCI’s gauge of stocks across the globe gained 0.09per cent.

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Traders sent U.S. Treasury yields lower after the government said it is considering a reduction in issuance and the payroll report. Yields subsequently stabilized to pre-open levels.

Ten-year notes last fell 3/32 in price to yield 1.1837per cent, from 1.174per cent late on Tuesday.

Strong corporate profits have eased concerns over the COVID-19 pandemic, as vaccine roll-outs continue apace in developed markets. But investors are also weighing inflationary pressures and a growing belief that the Federal Reserve may soon signal its intention to trim support for the economy.

St. Louis Federal Reserve President James Bullard said on Wednesday that the U.S. labor market is likely to recover at a pace of about 500,000 jobs a month. The return to pre-pandemic employment levels by next summer would lend support to tapering asset purchases and, if needed, raising interest rates next year, Bullard said during an online interview with the Washington Post.

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Investors are waiting for the latest U.S. non-farm payroll numbers on Friday – the last before Federal Reserve leaders convene in Jackson Hole, Wyoming, to discuss policy and decide future stimulus strategy.

Oil prices were negative as the spread of the Delta variant in top consuming countries outweighed Mideast geopolitical tensions and a fall in U.S. inventories.U.S. crude recently fell 2.1per cent to US$69.08 per barrel and Brent was at US$71.26, down 1.59per cent on the day.

The dollar index rose 0.137per cent, with the euro down 0.07per cent to US$1.1852.

Gold prices edged higher due to a weaker dollar, although gains were kept in check ahead of U.S. jobs data later this week, seen as pivotal to the Federal Reserve’s monetary policy strategy.

Spot gold added 0.3per cent to US$1,815.27 an ounce. U.S. gold futures gained 0.58per cent to US$1,820.60 an ounce.

(Reporting by Lawrence Delevingne; Editing by Dan Grebler)