U.S. stock futures fell 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.
Futures on the S&P 500 (ES=F) were down about 0.3%, while those on the Dow Jones Industrial Average (YM=F) were down about 0.1%. Contracts on the tech-heavy Nasdaq 100 (NQ=F) led the declines, falling 0.6%. Major indicators ended Wednesday’s volatile session mixed as their sluggish start to September continued.
Private employers in the U.S. reported their smallest monthly hiring growth 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 lack of momentum in stocks comes as the market is torn between conflicting impulses as data releases paint a bleak picture for the economy. Recent soft readings have called 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 now put the odds at nearly 50% that the Federal Reserve will cut rates by 0.5% at its September meeting.
On the corporate front, earnings from HPE (HPE) and C3.ai (AI) shed some light on the outlook for AI growth. C3.ai shares fell 20% in premarket trading after the maker of enterprise AI software reported weak subscription revenue. HPE shares fell on disappointment over profitability.
