Looming Jobs Data May Lead To Choppy Trading On Wall Street

The major U.S. index futures are currently pointing to a mixed open on Thursday, with stocks likely to show a lack of direction after turning lower over the course of the previous session.

Trades may be reluctant to make significant moves ahead of the release of the Labor Department’s closely watched monthly jobs report on Friday.

Economists currently expect employment to increase by 180,000 jobs in November after rising by 150,000 jobs in October, while the unemployment rate is expected to hold at 3.9 percent.

The jobs report could have a significant impact on the outlook for interest rates ahead of the Federal Reserve’s monetary policy meeting next week.

While the Fed is widely expected to leave interest rates unchanged, traders will be looking to the jobs data to provide further evidence the central bank could cut rates as soon as March 2024.

A day ahead of the release of the monthly jobs report, the Labor Department released a report showing a slight uptick in first-time claims for U.S. unemployment benefits in the week ended December 2nd.

After a positive start, stocks gave up their gains and moved along the flat line until around mid-afternoon on Wednesday before drifting lower to end the day’s session on a weak note.

The major averages all ended modestly lower. The Dow, which advanced to 36,292.58 in early trading, settled at 36,054.43, losing 70.13 points or 0.2 percent. The S&P 500 ended down 17.84 points or 0.4 percent at 4,549.34, while the Nasdaq closed lower by 83.20 points or 0.6 percent at 14,146.71.

Stocks moved higher earlier in the session, reacting positively to a report from payroll processor ADP showing private sector employment in the U.S. increased by less than expected in the month of November.

ADP said private sector employment rose by 103,000 jobs in November after climbing by a downwardly revised 106,000 jobs in October. Economists had expected private sector employment to advance by 130,000 jobs compared to the addition of 113,000 jobs originally reported for the previous month.

“Restaurants and hotels were the biggest job creators during the post-pandemic recovery,” said ADP chief economist Nela Richardson. “But that boost is behind us.”

She added, “The return to trend in leisure and hospitality suggests the economy as a whole will see more moderate hiring and wage growth in 2024.”

The weaker than expected private sector job growth added to recent optimism the Federal Reserve is done raising interest rates.

However, stocks retreated as traders chose to lighten commitments due to concerns about possible overbought conditions in the market and amid caution ahead of the Labor Department’s closely watched monthly jobs report on Friday.

Energy stocks shed ground, weighed down by a sharp drop in oil prices amid concerns about the outlook for fuel demand and on data showing a larger than expected increase in gasoline inventories in the week ended December 1st.

Marathon Petroleum, Marathon Oil, Enphase Energy, Constellation Energy, Baker Hughes and Valero Energy lost 2 to 4 percent.

Commodity, Currency Markets

Crude oil futures are rising $0.78 to $70.16 a barrel after plunging $2.94 to $69.38 a barrel on Wednesday. Meanwhile, after climbing $11.60 to $2,047.90 an ounce in the previous session, gold futures are inching up $3.50 to $2,051.40 an ounce.

On the currency front, the U.S. dollar is trading at 144.86 yen versus the 147.31 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.0785 compared to yesterday’s $1.0764.

Asia

Asian stocks ended Thursday’s session mostly lower as Australian trade data disappointed, and the yen firmed up on expectations for a hawkish BoJ pivot.

Chinese trade data proved to be a mixed bag, with exports edging higher for the first time in six months in November, while imports showed negative growth – suggesting a sticky weak domestic demand environment.

The dollar was muted after U.S. private payrolls increased less than expected in November.

Oil rebounded from six-month lows in Asian trading, while gold traded in a narrow trading band as investors awaited the all-important U.S. jobs report due Friday to gauge when the Federal Reserve could begin trimming interest rates.

China’s Shanghai Composite Index finished marginally lower at 2,966.21 after hitting a more than one-month low earlier as trade data for November sent mixed signals about the state of the world’s second-largest economy.

Hong Kong’s Hang Seng Index hit a 13-month low before ending 0.7 percent lower at 16,345.89.

Japanese markets tumbled on heightened expectations that the Bank of Japan might soon embark on an exit from decades of ultra-low interest rates.

The Nikkei 225 Index slumped 1.8 percent to 32,858.31 as the yen rallied to over three-month highs against the dollar on expectations the Bank of Japan will end its ultra-loose policies in 2024.

The broader Topix Index settled 1.1 percent lower at 2,359.91, with energy and chip-related stocks pacing the decliners.

Seoul stocks edged slightly lower, with the Kospi slipping 0.1 percent to 2,492.07 on concerns the U.S. economy may be losing steam.

Australian markets finished marginally lower as oil futures bounced back after suffering heavy losses in the U.S. trading session overnight.

Boss Energy lost 8 percent after completing a $205 million share placement. Invictus soared 28 percent after announcing a significant gas discovery in its Muzarabani exploration project.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index rose 0.3 percent to 11,496.61.

Europe

European stocks have edged lower on Thursday after data showed German industrial output unexpectedly fell in October in a further sign of a deteriorating environment in the key manufacturing base of Europe’s largest economy.

While the U.K.’s FTSE 100 Index has edged down by 0.1 percent, the German DAX Index and the French CAC 40 Index are both down by 0.2 percent.

Saint-Gobain shares have dipped. The French building materials firm has acquired Menkol Industries Private Limited, an Indian manufacturer specializing in high-added value waterproofing systems.

Airline group Air France-KLM has moved sharply lower after JPMorgan analysts downgraded their rating on the stock.

Games Workshop has also shown a substantial move to the downside in London after releasing its half-year trading update.

DS Smith, a packaging company, has also fallen after reporting a decline in pre-tax profit for the first half.

Future Plc shares have plummeted. The platform for specialist media announced that Penny Ladkin-Brand, Chief Financial and Strategy Officer, has informed the Board of her decision to step down later next year.

Watches of Switzerland Group has also declined after its first-half profit before tax dropped 20 percent.

Meanwhile, AJ Bell has jumped. The asset management company reported higher profit and revenues, as well as assets under management for fiscal 2023.

Biopharmaceutical company Ipsen SA has also advanced after saying it expects sales to grow at least 7 percent on an average annually for the period 2023-27 at constant exchange rates.

U.S. Economic Reports

First-time claims for U.S. unemployment benefits inched slightly higher in the week ended December 2nd, according to a report released by the Labor Department on Thursday.

The report said initial jobless claims ticked up to 220,000, an increase of 1,000 from the previous week’s revised level of 219,000.

Economist had expected jobless claims to rise to 222,000 from the 218,000 originally reported for the previous week.

The Labor Department said the less volatile four-week moving average also crept up to 220,750, an increase of 500 from the previous week’s revised average of 220,250.

At 10 am ET, the Commerce Department is due to release its report on wholesale inventories in the month of October. Wholesale inventories are expected to edge down by 0.2 percent.

The Treasury Department is scheduled to announce the results of this month’s auctions of three-year and ten-year notes and thirty-year bonds at 11 am ET.

At 3 pm ET, the Federal Reserve is due to release its report on consumer credit in the month of October. Consumer credit is expected to increase by $9.0 billion.

Stocks In Focus

Shares of Sprinklr (CXM) are moving sharply lower in pre-market trading after the software company reported better than expected fiscal third quarter results but provided disappointing sales guidance.

Video game publisher Take-Two Interactive (TTWO) may also move to the downside after Bank of America downgraded its rating on the company’s stock to Neutral from Buy.

On the other hand, shares of Dollar General (DG) are likely to see initial strength after the discount retailer reported fiscal third quarter results that exceeded analyst estimates.

Electric vehicle company Rivian (RIVN) may also move to the upside after Stifel initiated coverage of the company’s stock with a Buy rating.