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U.S. stocks mostly trading higher Wednesday morning, even after a report on private-sector employment in August came in below forecasts, ahead of Friday’s monthly government jobs report that is expected to inform the timing of the Federal Reserve’s reduction of bond purchases that helped to support financial markets during the pandemic.

What are major indexes doing?

  • The Dow Jones Industrial Average fell 21 points, or 0.1%, to 35,337.
  • The S&P 500 gained 4 points, or 0.1%, to 4,526.
  • The Nasdaq Composite Index rose 75 points, or 0.5%, to reach 15,335.

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

What’s driving the market?

The gain in private sector jobs in August was weaker than expected in ADP data published Wednesday, but that might be a good thing for a market that is anxious about the start of the end of easy-money policies that have been credited as a key source of record-setting prices for stocks and other assets.

On Wednesday, the private sector report on employment from Automatic Data Processing showed an increase in August of 374,000 jobs, far weaker than 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 in the midst of the spread of the coronavirus delta variant 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.

“That rounds out a grim week for China’s PMIs as Covid-19 lockdowns and the same supply chain challenges the rest of the world is experiencing erode economic performance,” said Jeffrey Halley, an analyst at broker OANDA.

In other 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.

“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.”

The Institute for Supply Management’s manufacturing index is due at 10 a.m. ET. A report on U.S. construction spending for July will be released the same time as ISM’s reading.

In other news, market participants may keep on eye on a meeting between the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, including Russia and Saudi Arabia, which are meeting to discuss output plans.

How are other markets faring?

  • In Asia, Tokyo’s Nikkei 225 surged 1.3%, while the Hong Kong Hang Seng Index lifted 0.6% and the Shanghai Composite rose 0.7%.
  • Chinese technology stocks and Tencent were standouts in Asian trading, helping the Hang Seng Tech Index outperform and rise 1.3%.
  • London’s FTSE 100 was 0.9% higher, while the pan-European Stoxx 600 increased 0.7%; in Paris, the CAC 40 ticked up 1% and Frankfurt’s DAX moved 0.5% into the green.
  • Oil prices were marginally higher, with international benchmark Brent crude ticking up near 0.5%, approaching $72 a barrel.
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