Futures contracts for the main U.S. equity benchmarks were headed lower on Thursday as investors awaited a clutch of economic reports, including those that track the services sector and the state of U.S. labor markets.
Notably, a monthly update on private-sector employment in May will be published by ADP, followed by the Labor Department’s weekly jobless benefit claims, and the IHS Markit and ISM service sector activity indexes.
How are stock benchmarks performing?
- Futures for the Dow Jones Industrial Average YMM21, -0.53% YM00, -0.53% were off 175 points, or 0.5%, to reach 34,415.
- S&P 500 index futures ES00, -0.61% ESM21, -0.61% were down 27.20 points, or 0.7%, at 4,179.
- Nasdaq-100 futures NQ00, -0.81% NQM21, -0.81% declined 125.25 points to reach 13,550.25, a decline of 0.9%.
On Wednesday, the Dow DJIA, +0.07% rose 25.07 points to eke out a fifth straight gain; the S&P 500 SPX, +0.14% climbed 6.08 points, or 0.1%, to 4,208.12; the Nasdaq Composite Index COMP, +0.14% advanced 19.85 points, or 0.1%, to 13,756.33.
What’s driving the market?
A private-sector employment report from Automatic Data Processing Inc. is expected to show an increase of 627,000 jobs in May, based on consensus forecast from economists’ polled by Econoday.
Last month, ADP reported that 742,000 private-sector jobs were added in April, which didn’t align with the more closely followed payrolls report from the Labor Department, which showed that a mere 266,000 jobs were created in April, compared with predictions of about 1 million jobs.
The ADP report is set to be released at 8:15 a.m., ahead of the weekly report on initial jobless claims from the U.S. Labor Department is scheduled to be released at 8:30 a.m. Eastern. Economists surveyed by Econoday are forecasting a continued decline in those seeking first-time jobless benefits, with the reading estimated to hit 400,000 for the week ended May 29, which would be a fresh pandemic low, versus 406,000 in the prior week.
Thursday’s employment readings will set the tone for the more closely followed Labor Department’s May jobs report on Friday, which could serve as a catalyst for markets that have mostly moved sideways in recent weeks.
The Federal Reserve’s Beige Book, released on Wednesday, showed that the economy was experiencing moderate growth as it emerged from the COVID pandemic, as vaccinations and the easing of lockdowns playout, but it also highlighted supply-chain disruptions and labor shortages that could intensify fears of inflation.
The Fed’s policy makers have been saying that they expect inflation to be transitory. However, market participants say the Fed has been laying the groundwork for discussions around scaling back its accommodations if the economy overheats.
“The Fed is stealthily planting the seeds for normalizing monetary policy, which could become the dominant market theme by the late summer or fall, assuming US economic data remains strong,” wrote Marios Hadjikyriacos, investment analyst at XM, in a daily note.
In addition to jobs data, surveys of service sector purchasing managers are scheduled to be released starting at 9:45 a.m. from IHS Markit and the Institute for Supply Management at 10 a.m.
Although the broader market moves have been subdued, so-called meme stocks, which have been heavily influenced by social media and not financial fundamentals, have been on a tear, including AMC Entertainment Holdings AMC, +95.22%, GameStop Corp. GME, +13.34% and Bed Bath & Beyond BBBY, +62.11%, raising concerns anew about bubbles forming in parts of the financial system amid the low-interest-rate environment.
On the public health front, the seven-day average for new U.S. cases has fallen 46% from two weeks ago, according to a New York Times tracker, and for hospitalizations has declined 22%, and deaths have dropped 35% as vaccinations continue to increase.
The number of Americans fully vaccinated increased to 136 million, or 41% of the total population, while the number of people who are at least 18 years old who have been fully vaccinated grew to 133.8 million, or 51.9% of the population.
Which companies are in focus?
- Tesla Inc. TSLA is recalling nearly 6,000 cars because brake caliper bolts may be lose and cause a loss of tire pressure, Reuters reported.
- Shares of Express Inc. EXPR, surged Thursday, after the apparel retailer reported a narrower-than-expected fiscal first-quarter loss and revenue that rose above forecasts, as the company experienced an “inflection point” after Easter.
- BJ’s Wholesale Club Holdings Inc. BJ said Thursday it is now offering Citizens Pay, a buy-now-pay-later payment option for purchases of more than $99.
- Furniture retailer Conn’s Inc. shares CONN soared in premarket trade Thursday, after the company posted first-quarter earnings that crushed expectations.