U.S. stock markets were mixed on Thursday as investors digested weaker-than-expected labor market data that could revise expectations for both rate cut hopes and the health of the U.S. economy.
The S&P 500 (^GSPC) fell as much as 0.2%, while the Dow Jones Industrial Average (^DJI) fell 0.4%. The tech-heavy Nasdaq Composite (^IXIC) rose 0.4%, lifted by a gain in Tesla (TSLA) shares. The gauges ended Wednesday’s volatile session mixed as their sluggish start to September continued.
Private employers in the U.S. reported their smallest monthly growth in job openings since January 2021, new data from ADP showed Thursday. Private payrolls grew by about 99,000, well below expectations. Meanwhile, slightly fewer Americans filed new claims for unemployment benefits last week. Government data showed a decline in jobless claims on Wednesday.
Together, the labor market data provide a preview of Friday’s August jobs report, a key report for the Fed’s policy decisions that is being closely watched amid hopes for a “Goldilocks” economy.
The market is being torn between conflicting impulses as data releases paint a bleak picture for the economy. Recent soft readings are calling for deeper rate cuts. But they could also be a sign that the U.S. is on the brink of recession and a “soft landing” is no longer in the cards.
Traders are putting the odds at nearly 50% that the Federal Reserve will cut rates by 0.5% at its September meeting.
Read more: Fed Forecasts for 2024: What Experts Say About the Possibility of a Rate Cut
On the enterprise front, earnings from HPE (HPE) and C3.ai (AI) shed some light on the outlook for AI growth. C3.ai shares fell 11% after the maker of enterprise AI software reported weak subscription revenue. HPE shares fell on disappointment over profitability.
Meanwhile, Tesla (TSLA) rose more than 5% as the company plans to stick with plans to launch its Full Self-Driving software in China and Europe, pending regulatory approval.
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