U.S. Stocks May Extend Yesterday’s Steep Drop In Early Trading

Stocks may move to the downside in early trading on Wednesday, extending the steep drop seen in the previous session. The major index futures are currently pointing to a lower open for the markets, with the S&P 500 futures down by 0.2 percent.

Concerns the Federal Reserve may hold off on lowering interest rates may continue to weigh on the markets following the release of more upbeat U.S. economic data.

Payroll processor ADP released a report this morning showing stronger than expected private sector job growth in the U.S. in the month of March.

ADP said private sector employment jumped by 184,000 jobs in March after climbing by an upwardly revised 155,000 jobs in February.

Economists had expected private sector employment to increase by 148,000 jobs compared to the addition of 140,000 jobs originally reported for the previous month.

The report also said the annual rate of pay growth for job-changers accelerated dramatically to 10.0 percent in March.

“Inflation has been cooling, but our data shows pay is heating up in both goods and services,” said ADP chief economist Nela Richardson.

Treasury yields have risen following the release of the data, with the yield on the benchmark ten-year note seeing further upside after ending Tuesday’s trading at a four-month closing high.

A steep drop by shares of Intel (INTC) may also weigh on Wall Street, as the semiconductor giant is plunging by 5.2 percent in pre-market trading.

Intel is under pressure after disclosing a $7 billion operating loss by its semiconductor manufacturing business in 2023, wider than the $5.2 billion operating loss the year before.

Overall trading activity may be somewhat subdued, however, as traders look ahead to remarks by Federal Reserve Chair Jerome Powell this afternoon.

Shortly after the start of trading, the Institute for Supply Management is scheduled to release its report on service sector activity in the month of March.

The ISM’s services PMI is expected to inch up to 52.7 in March from 52.6 in February, with a reading above 50 indicating growth.

After moving sharply lower early in the session, stocks continue to see considerable weakness throughout the trading day on Tuesday. The Dow and the S&P 500 added to Monday’s losses, pulling back further off the record closing highs set last Thursday.

The major averages ended the session off their worst levels of the day but still firmly in the red. The Dow tumbled 396.61 points or 1.0 percent to 39,170.24, the Nasdaq slumped 156.38 points or 1.0 percent to 16,240.45 and the S&P 500 slid 37.96 points or 0.7 percent to 5,205.81.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan’s Nikkei 225 Index slumped by 1.0 percent, while Hong Kong’s Hang Seng Index tumbled by 1.2 percent.

Meanwhile, the major European markets are turning in a mixed performance on the day. While the U.K.’s FTSE 100 Index is down by 0.3 percent, the French CAC 40 Index and the German DAX Index are both up by 0.2 percent.

In commodities trading, crude oil futures are climbing $0.71 to $85.86 a barrel after jumping $1.44 to $85.15 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $2,288.70, up $6.90 compared to the previous session’s close of $2,281.80. On Tuesday, gold jumped $24.70.

On the currency front, the U.S. dollar is trading at 151.87 yen compared to the 151.56 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.0775 compared to yesterday’s $1.0770.

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