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Major market averages are mixed Wednesday morning after a softer ADP jobs report.
At first and the Nasdaq Composite (COMP.IND) fell 0.9%the S&P 500(SP500) slipped 0.3%and the Dow (DJI) went up 0.1%.
Rates dropped Wednesday morning. The 10-year Treasury yield (US10Y) fell 5 basis points to 3.28% and the 2-year yield (US2Y) fell 12 basis points to 3.70%.
The 10-year Treasury yield fell to a 6-month low, hitting levels not seen since September 2022. “As Fed cuts become more likely, yields should continue to fall,” ING said.
The “big turning point (for stocks) happened yesterday after the US data release, and the pullback came after the US job openings report (JOLTS) came out,” wrote Jim Reid of Deutsche Bank. It was “the first time (openings) were below 10 million since May 2021. The statement added to signs that the Fed’s tightening cycle was having an increasing effect, and record levels adjustment in the labor market were finally beginning to relax.”
ADP’s March private employment measure came in at 145K, which was less than the expected figure of 200K.
“Since ADP’s model was rebuilt and relaunched in August last year, its record in predicting initial official payroll estimates, the only reason to look at ADP numbers, has been poor,” Pantheon Macro said. “The average difference between the two figures is a sub-63,000 rebound, but the difference is huge, from a sub-324,000 rebound in January (employment at ADP client companies appears to be much less weather-sensitive than the sample oficial) up to an excess of 324,000 in January. 33K in December”.
Wall Street also received the ISM Services Index, which was below the consensus marker of 54.5 and at 51.2.
As for individual actions, FedEx is in the spotlight as it prepares to outline billions in cost savings.