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U.S. stocks pushed further into record territory Wednesday, despite an August private-sector employment report coming in below forecasts, which puts Friday’s monthly government jobs report and the timing for tapering of the Federal Reserve’s bond purchases in focus.

What are major indexes doing?
  • The Dow Jones Industrial Average DJIA, +0.03% rose 29 points, or 0.1%, to around 35,388, after trading almost 100 points lower at the session lows.
  • The S&P 500 SPX, +0.30% gained 12 points, or 0.3%, to 4,535, above its Aug. 30 closing high of 4,528.79.
  • The Nasdaq Composite Index COMP, +0.76% rose 112 points, or 0.7%, to reach 15,372.23, above its Aug. 30 closing record of 15,265.89.

On Tuesday, the Dow DJIA, +0.03% fell 39 points, or 0.1%, to 35,360, in line with the S&P 500 SPX, +0.30%, which fell 0.1% to 4,522.68 and the Nasdaq COMP, +0.76%, which closed just below flat at 15,259.24.

What’s driving the market?

Stocks climbed further into record territory, even as private-sector job gains in August came in weaker than expected, in data published Wednesday.

But the “bad news” on the jobs front might be good news for investors on edge about the potential for volatility to kick up in September, and about the Fed’s eventual pullback of its easy-money policies, credited as a key source of record-setting prices for stocks and other assets.

“I think that September, and the volatility that’s usually around in September, can really come back into play,” said Sahak Manuelian, head of equity trading at Wedbush Securities in Los Angeles, in a phone interview.

“It’s been quite the grind higher, and these things are tough to sustain going into September and October,” he said. “But what is telling is that with this jobs report, even bad news is good, because it could mean further support in the form of more stimulus and aid.”

The Automatic Data Processing report showed a second-straight month of weak jobs creation, with August adding 374,000 private-sector jobs, far below the 600,000 forecast by economists surveyed by The Wall Street Journal. On top of that, July’s rise in jobs was reduced to 326,000 from 330,000.

To be sure, the ADP report has a poor record month-to-month in signaling results for the Labor Department’s more closely followed nonfarm payrolls. However, the data does raise some questions about the health of the jobs market as the spread of the coronavirus delta variant has been filling hospital beds in some states.

“The relatively muted 374,000 increase in the ADP measure of private employment in August would appear to suggest that the recent surge in virus cases is weighing on the economy,” wrote Andrew Hunter, senior U.S. economist at Capital Economics, following the private-sector data.

The weak data in jobs comes after China’s Caixin manufacturing purchasing managers index, or PMIs, for August confirmed Tuesday’s official figures to show that Chinese factory activity contracted last month. Data from seven Southeast Asian countries in the ASEAN bloc also showed that manufacturing activity contracted for the first time since May 2020.

In U.S. economic data, the IHS Markit manufacturing purchasing managers index posted 61.1 in August, down from 63.4 in July, and broadly in line with the earlier released “flash” estimate of 61.2. A reading of 50 or greater indicates improving conditions.

“US goods producers continued to register marked upturns in output and new orders in August, as demand flourished once again,” Sian Jones, Senior Economist at IHS Markit said. “That said, constraints on production due to material shortages exerted further pressure on capacity as backlogs of work rose at a near-record rate.”

Following the Markit data, the Institute for Supply Management’s manufacturing index showed a rise to 59.9 in ​August from 59.5 in the prior month, and a report on U.S. construction spending increased 0.3% in July.

Oil futures were lower Wednesday, after a meeting between the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, including Russia and Saudi Arabia, ended with no changes to their plan to gradually increase crude production.

Which companies are in focus?
  • Walmart IncWMT shares were off 0.4% after the retail giant said it will host hiring events on September 8 and September 9, with plans to add 20,000 supply chain associates. 
  • Robinhood Markets Inc. HOOD shares rose 1.7% after it disclosed Wednesday that the Securities and Exchange Commission staff is reviewing the zero-commission trading platform’s registration statement filed on Aug. 5 for the sale of up to 97.9 million shares of common stock by selling shareholders.
  • Shares of Apple Inc. AAPL were 1.3% up Wednesday after The Wall Street Journal reported that the technology behemoth will eventually include a tool to monitor blood pressure and a thermometer to help with fertility planning in its smartwatches.
  • Vera Bradley IncVRA shares plunged 16.3% in Wednesday trading after the accessories company reported fiscal second-quarter profit and sales that missed expectations.
  • FAT Brands Inc. FAT said Wednesday it agreed to pay $300 million to buy Twin Peaks, a Dallas-based chain of more than 100 sports lodges offering cold draft beer, from seller Garnett Station Partners LLC, the New York-based private-equity firm.
  • Campbell Soup Co. CPB reported fiscal fourth-quarter net income of $288 million, or 95 cents per share, up from $86 million, or 28 cents per share, last year.
  • Dollar General Corp. DG said Wednesday that it is looking for store employees, distribution center workers and drivers with a commercial driver’s license (CDL) for its private fleet. 
  • Shares of Nio IncNIO were flat Wednesday, after the China-based electric vehicle maker cut its third-quarter deliveries outlook, citing the “uncertainty and volatility” of semiconductor supplies. 
How are other markets faring?
  • In Asia, Tokyo’s Nikkei 225 NIK, +1.29% surged 1.3%, while the Hong Kong Hang Seng Index HSI, +0.58% lifted 0.6% and the Shanghai Composite SHCOMP, +0.65% rose 0.7%.
  • Chinese technology stocks 9618, +1.63% and Tencent 700, +1.50% were standouts in Asian trading, helping the Hang Seng Tech Index HSXTCHINDXXX, +1.30% outperform and rise 1.3%.
  • London’s FTSE 100 UKX, +0.42% closed 0.4% higher, and the pan-European Stoxx 600 SXXP, +0.48% rose 0.5%; in Paris, the CAC 40 PX1, +1.18% advanced 1.2% and Frankfurt’s DAX DAX, -0.07% declined 0.1%.
  • Oil prices trimmed losses, with the U.S. benchmark CL00, falling 0.2% to $68.39 a barrel; international benchmark Brent BRN00, -0.36% crude was 0.4% lower at $71.37 a barrel.

Jack Denton contributed reporting