Markets had a much brighter day yesterday after the release of ADP private data showed fewer US jobs were created in September than expected. US stocks rose on the news, and it is thought that the data could somewhat ease investors' minds on the uncertainty around further interest rate hikes this year.
US ADP report shows fewer than expected jobs created in September
After the storm felt over the past few days, calm came to the markets yesterday.
On Tuesday, the Dow Jones index had its worst daily performance since March of this year after the release of the JOLT job offers data showed a higher-than-expected figure. This also resulted in the fall of the three main Wall Street indices during the day as bond yields rose.
Things seemed to change yesterday after the publication of the ADP private data showed a sharp contrast to the JOLT job offers report. According to the data, the US private sector added 89,000 jobs in September. A number much lower than the expected 153,000, which refers to a time when the job market saw the slowest pace of growth since January 2021 and when private employers cut jobs.
This figure may indicate a certain slowing down of the labour market and, as a result, could ease concerns about more interest rate hikes by the Federal Reserve (Fed).
US stocks rose on indicator of a cooling labour market
After the ADP employment data was released, bond yields fell around 6 bps in the 10-year bond. The US Dollar weakened slightly, and the stock market reacted positivity, boosting the technology Nasdaq index by more than 1%.
But is this data enough to change investors’ risk sentiment?
Obviously not.
Continued confirmation is needed over time to prove that the labour market is no longer so tight.
Markets are waiting for the jobless claims and non-farm payrolls data
In this sense, both the jobless claims report to be released today and the non-farm payrolls to come out on Friday, will have special significance for the market.
The stock market has taken a significant hit since August. The S&P500 has already lost 8% and the DowJones30 industrial index has had a negative performance so far this year. Positive employment data showing a weakening labour market, could boost the stock market and be the catalyst for a change in risk sentiment.
USA500 monthly chart, October 5, 2023. Source: CAPEX.com WebTrader.
Key Takeaways
- Markets were more uplifted yesterday after release of US ADP private data.
- The data showed 89,000 jobs were created in September, much less than the expected 153,000.
- This new data may indicate a weakening of the US job market.
- The Fed may take this under considering when deciding on interest rates.
- Bonds fell, the Dollar weakened, and US stocks rose after the release.
- Markets wait for the release of the jobless claims and non-farm payrolls data to confirm the change in the labour market.
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Sources: Bloomberg, Reuters
