U.S. Stocks May Lack Direction Following Mixed Jobs Data

Following the sharp pullback seen over the course of the previous session, stocks may show a lack of direction in early trading on Wednesday. The major index futures are currently pointing to a roughly flat open for the markets, with the S&P 500 futures down by less than a tenth of a percent.

Traders may be reluctant to make significant moves amid uncertainty about the outlook for interest rates following the release of mixed U.S. jobs data.

While payroll processor ADP released a report showing private sector job growth slowed more than expected in December, the Labor Department released a report showing weekly jobless claims unexpectedly fell to their lowest level in almost eleven months.

ADP said private sector employment rose by 122,000 jobs in December after climbing by 146,000 jobs in November. Economists had expected private sector employment to grow by 140,000 jobs.

The report said hiring slowed in several industries, while employment in the manufacturing sector shrank for the third straight month.

“The labor market downshifted to a more modest pace of growth in the final month of 2024, with a slowdown in both hiring and pay gains,” said ADP Chief Economist Nela Richardson.

Meanwhile, the Labor Department released a report unexpectedly showing another modest decrease by first-time claims for U.S. unemployment benefits in the week ended January 4th.

The report said initial jobless claims slipped to 201,000, a decrease of 10,000 from the previous week’s unrevised level of 211,000. Economists had expected jobless claims to rise to 218,000.

With the unexpected dip, jobless claims fell to their lowest level since hitting 200,000 in the week ended February 17, 2004.

The Labor Department is scheduled to release its closely watched monthly jobs report on Friday, potentially providing additional clarity about the strength of the labor market.

Later in the day, the Federal Reserve is due to release the minutes of its latest monetary policy meeting, which may also provide clues about the outlook for interest rates.

Stocks moved higher early in the session on Tuesday but pulled back sharply over the course of the trading day. The major averages all moved to the downside on the day, with the tech-heavy Nasdaq leading the way lower.

The major averages climbed off their worst levels going into the close but remained firmly in the red. The Nasdaq tumbled 375.30 points or 1.9 percent to 19,489.68, the S&P 500 slumped 66.35 points or 1.1 percent to 5,909.03 and the Dow fell 178.20 points or 0.4 percent to 42,528.36.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Wednesday. Japan’s Nikkei 225 Index dipped by 0.3 percent and Hong Kong’s Hang Seng Index slid by 0.9 percent, while South Korea’s Kospi jumped by 1.2 percent.

Meanwhile, the major European markets have all moved to the downside on the day. While the French CAC 40 Index is down by 1.0 percent, the U.K.’s FTSE 100 Index is down by 0.5 percent and the German DAX Index is down by 0.2 percent.

In commodities trading, crude oil futures are rising $0.28 to $74.53 a barrel after climbing $0.69 to $74.25 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,670.40, up $5 compared to the previous session’s close of $2,665.40. On Tuesday, gold jumped $18.

On the currency front, the U.S. dollar is trading at 158.27 yen compared to the 158.05 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.0295 compared to yesterday’s $1.0340.