U.S. Stocks May Come Under Pressure Following Strong Jobs Data

U.S. Stocks May Come Under Pressure Following Strong Jobs Data

June 10, 2021

After closing nearly unchanged for two straight days, stocks may come under pressure in early trading on Thursday. The major index futures are currently pointing to a lower open for the markets, with the Dow futures down by 189 points.

While a report from payroll processor ADP showed private sector employment in the U.S. spiked by much more than expected in the month of May, the strong job growth may raise concerns about the outlook for monetary policy.

ADP said private sector employment soared by 978,000 jobs in May after surging by a downwardly revised 654,000 jobs in April.

Economists had expected private sector employment to increase by 650,000 jobs compared to the addition of 742,000 jobs originally reported for the previous month.

A separate report from the Labor Department showed a modest decrease in first-time claims for U.S. unemployment benefits in the week ended May 29th.

The report said initial jobless claims dipped to 385,000, a decrease of 20,000 from the previous week’s revised level of 405,000.

Economists had expected jobless claims to edge down to 395,000 from the 406,000 originally reported for the previous week.

With the slightly bigger than expected decrease, jobless claims once again fell to their lowest level since hitting 256,000 in the week ended March 14, 2020.

The jobs data comes a day ahead of the release of the Labor Department’s more closely watched report on the employment situation in the month of May.

Economists currently expect the report to show employment jumped by 664,000 jobs in May after climbing by 266,000 jobs in April. The unemployment rate is also expected to dip to 5.9 percent from 6.1 percent.

Not long after the start of trading, the Institute for Supply Management is scheduled to release its report on service sector activity in the month of May.

Economists expect the ISM’s services PMI to inch up to 63.0 in May from 62.7 in April, with a reading above 50 indicating growth in the sector.

Largely mirroring the performance seen on Tuesday, stocks moved to the upside in early trading on Wednesday but showed a lack of direction for much of the rest of the day. The major averages once again finished the day near the unchanged line.

A late move to the upside helped the major averages close modestly higher. The Dow inched up 25.07 points or 0.1 percent to 34,600.38, the Nasdaq edged up 19.85 points or 0.1 percent to 13,756.33 and the S&P 500 crept up 6.08 points or 0.1 percent to 4,208.12.

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Thursday. Japan’s Nikkei 225 Index rose by 0.4 percent, while China’s Shanghai Composite Index fell by 0.4 percent.

Meanwhile, the major European markets have all moved to the downside on the day. While the U.K.’s FTSE 100 Index has slumped by 1.1 percent, the German DAX Index and the French CAC 40 Index are both down by 0.5 percent.

In commodities trading, crude oil futures are inching up $0.07 to $68.90 a barrel after jumping $1.11 to $68.83 a barrel on Wednesday. Meanwhile, after rising $4.90 to $1,909.90 an ounce in the previous session, gold futures are tumbling $22.60 to $1,887.30 an ounce.

On the currency front, the U.S. dollar is trading at 109.89 yen versus the 109.56 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.2169 compared to yesterday’s $1.2211.

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