The S&P 500 Closes Lower as Private Payrolls Miss Expectations Ahead of Nonfarm Payrolls Report
In a disappointing turn of events, the S&P 500 closed lower on Thursday as concerns about the economy grew following mixed employment data. At 4:00 p.m. ET, the Dow Jones Industrial Average had slipped by 219 points, the S&P 500 fell 0.3%, and the Nasdaq fell 0.3%.
Private payrolls in the US increased by less than expected in August, raising worries about the state of the economy. According to ADP, private payrolls grew by 99,000 jobs in August, compared to a revised total of 111,000 in July. This was the weakest month for the figure since January 2021. Economists had predicted a reading of 144,000, up from the original July mark of 122,000.
The number of Americans filing for first-time unemployment benefits also decreased slightly, coming in at 227,000 in the week ending on August 31. This data, along with the upcoming nonfarm payrolls report on Friday, has increased expectations for larger fed rate cuts.
In other news, Verizon closed lower after agreeing to acquire Frontier Communications in a $20 billion deal, while US Steel rebounded after a major slump on Wednesday. Hewlett Packard Enterprise Co Bell saw a 6% drop on margin concerns, while JetBlue Airways Corp climbed more than 6% after lifting its guidance for Q3. Tesla also rose over 4% after announcing plans to roll out its advanced driver assistance technology in Europe and China.
Overall, the market's reaction to the private payrolls data and upcoming nonfarm payrolls report suggests that investors are growing increasingly cautious about the economy. This could lead to more aggressive monetary policy responses, including potential rate cuts. It is important for investors to stay informed and monitor economic indicators to make informed decisions about their investments.