New York Stock Market Mixed Near Flat Amid Private Employment Slowdown... Awaiting August Employment Report

US August Private Employment Growth Hits Lowest in 3.5 Years
New Unemployment Claims Decrease Last Week
Focus on August Nonfarm Payroll Report to Be Released on 6th

The three major indices of the U.S. New York Stock Exchange showed mixed movements near the flat line in early trading on the 5th (local time). With private employment in August increasing at the slowest pace in three and a half years, investors are adopting a cautious stance, awaiting the 'August Employment Report' to be released the following day.

As of 9:32 a.m. in the New York stock market, the blue-chip-focused Dow Jones Industrial Average rose 0.14% from the previous trading day to 41,031.62. The large-cap-focused S&P 500 index increased by 0.03% to 5,521.94, while the tech-heavy Nasdaq index traded down 0.03% at 17,079.85.

Earlier that morning, indicators showed a slowdown in the U.S. labor market. According to ADP, a private labor market research firm, private sector job additions in August increased by 99,000, the lowest since January 2021. This figure fell short of both the forecast (144,000) and the previous month’s number (111,000). Following the U.S. Department of Labor’s announcement the day before that July job openings hit a 3.5-year low at 7.673 million, another signal of cooling in the labor market was detected within a day.

Nela Richardson, ADP’s Chief Economist, analyzed, "The downturn in the employment market has led to a slower-than-normal pace of hiring after tremendous growth over the past two years. The next key indicator to watch is wage growth, which has stabilized after a dramatic slump following the COVID-19 pandemic."

However, last week’s initial jobless claims decreased, presenting somewhat mixed employment data. Initial jobless claims for the week of August 25?31 totaled 227,000, below both the previous week’s 232,000 and the forecast of 231,000. Continuing claims, which count those claiming unemployment benefits for at least two weeks, stood at 1.838 million for the week of August 18?24, also below the revised previous week’s 1.86 million and the market estimate of 1.87 million.

A more accurate picture of the U.S. labor market will be revealed in the August nonfarm payroll report released by the U.S. Department of Labor on the 6th. Experts predict that nonfarm payrolls increased by 165,000 last month, with the unemployment rate at 4.2%. If nonfarm payrolls fall below 100,000 or the unemployment rate rises above 4.4?4.5%, the Federal Reserve (Fed) is expected to consider a significant rate cut.

Chris Larkin, Head of Trading at Morgan Stanley eTrade, commented, "Following today’s mixed indicators, the employment report to be released the next day will provide investors with a clearer picture of the labor market situation. The market is trying to determine whether the economy is slowing down too much or if the Fed is falling behind."

Due to the slowdown in private employment indicators, Treasury yields are declining. The yield on the 2-year U.S. Treasury note fell 5 basis points (1bp = 0.01 percentage point) to 3.71%, while the 10-year U.S. Treasury note, a global bond yield benchmark, dropped 4 basis points to 3.72% compared to the previous trading day.

By individual stocks, Frontier Communications is down 8.35%. The stock was negatively affected after Verizon announced plans to acquire the company for $20 billion. Tesla rose 3.22% after announcing it will launch a Full Self-Driving (FSD) support program in Europe and China in the first quarter of 2025. JetBlue is up 4.87% following an upward revision of its third-quarter earnings guidance. U.S. Steel, which plunged 17.47% the previous day amid reports that the Biden administration would block the sale of Nippon Steel, is currently up 2.86%.

International oil prices are rising due to delayed production increases by the Organization of the Petroleum Exporting Countries Plus (OPEC+) and declining U.S. inventories, but gains are limited amid concerns over weakening demand. West Texas Intermediate (WTI) crude oil is trading at $69.84 per barrel, up $0.64 (0.9%) from the previous day, while Brent crude, the global oil price benchmark, is at $73.36 per barrel, up $0.66 (0.9%).