The major U.S. index futures are currently pointing initial strength on Wall Street on Wednesday, with stocks likely to see further upside after ending yesterday’s lackluster session mostly higher.
Early buying interest may be generated in reaction to a report from payroll processor ADP showing private sector job growth in the U.S. slowed by more than expected in the month of May.
ADP said private sector employment climbed by 152,000 jobs in May after jumping by a downwardly revised 188,000 jobs in April.
Economists had expected private sector employment to increase by 173,000 jobs compared to the addition of 192,000 jobs originally reported for the previous month.
While the bigger than expected slowdown in job growth may add to recent concerns about the economy, the data is also likely to add to optimism about the outlook for interest rates.
The markets may also continue to take their cues from Nvidia (NASDAQ:NVDA), with the AI darling poised to reach a new record intraday high.
Overall trading activity may remain somewhat subdued, however, as traders look ahead to the release of the Labor Department’s closely watched monthly jobs report on Friday.
Economists currently expect the report to show employment jumped by 185,000 jobs in May after climbing by 175,000 jobs in April, while the unemployment rate is expected to hold at 3.9 percent.
Stocks fluctuated over the course of the trading session on Tuesday before eventually ending the day modestly higher. The major averages all finished the day in positive territory following the mixed performance seen on Monday.
The Dow climbed 140.26 points or 0.4 percent to 38,711.29, the Nasdaq rose 28.38 points or 0.2 percent to 16,857.05 and the S&P 500 edged up 7.94 points or 0.2 percent to 5,291.34.
The higher close by the major averages came amid a notable decrease by treasury yields, which extended the sharp pullback seen over the past few sessions.
The yield on the benchmark ten-year note closed lower for the fourth straight session, pulling back further off the nearly one-month closing high set last Wednesday.
The continued advance by treasuries came amid signs of weakness in the labor market, with a report from the Labor Department showing a modest decrease in U.S. job openings in the month of April.
The Labor Department said job openings fell to 8.059 million in April from a downwardly revised 8.355 million in March.
Economists had expected job openings to dip to 8.340 million from the 8.488 million originally reported for the previous month.
Bond traders are seemingly optimistic that the weakness in the labor market will encourage the Federal Reserve to lower interest rates in the coming months.
Despite the modest gains posted by the major averages, gold stocks moved sharply lower on the day, dragging the NYSE Arca Gold Bugs Index down by 4.2 percent. The sell-off by gold stocks came amid a notable decrease by the price of the precious metal.
Significant weakness was also visible among steel stocks, as reflected by the 3.3 percent slump by the NYSE Arca Steel Index.
Energy stocks also saw considerable weakness, as the price of crude oil saw further downside after OPEC+ announced plans to increase production starting in October.
Housing, financial and networking stocks also showed notable moves to the downside, while telecom, pharmaceutical and commercial real estate stocks saw some strength on the day.