Traders work on the floor of the New York Stock Exchange (NYSE) on November 11, 2022 in New York City.
Spencer Platt | Getty Images
Stock futures fell on Thursday after private payrolls data showed the labor market remains strong amid interest rate hikes by the Federal Reserve to control inflation.
Futures linked to the Dow Jones Industrial Average fell 158 points, or 0.47%. S&P 500 Nasdaq 100 futures fell 0.48% and 0.48%, respectively.
US stock futures fell after ADP’s private payrolls report showed employers added 235,000 jobs in December, well above economists’ estimates. Wages also rose more than expected, another sign that the job market remains hot.
“That’s what the Fed continues to insist on and why they want to keep rates up and leave them high all year,” said Peter Boockvar, chief investment officer at Bleakely Financial Group.
The moves follow a choppy trading session as traders examined a range of mixed economic data.
The November Job Openings and Job Turnover, or JOLTS, report showed that the labor market remained strong, reinforcing concerns that the Fed could continue to raise interest rates while there is a hot labor market. But the ISM manufacturing index showed the sector was contracting after 30 months of expansion, which investors saw as a positive sign that previous rate hikes were having the intended impact of cooling the economy .
Meanwhile, minutes from the Fed’s December meeting showed the central bank remained committed to higher interest rates for “some time.”
Investors have “wounds that are still fresh” after 2022, which marked the worst year for the stock market since 2008, said Keith Buchanan, portfolio manager at GLOBALT Investments. He said investors are trying to balance what each new economic data or Fed comment may indicate with broader concerns about the future.
“Every day that goes by and we get a data point that’s moving in the right direction, that’s positive,” Buchanan said. “But it’s also quickly followed by apprehension of how sensitive and delicate this moment is.”
Investors will be watching Thursday for more data on jobs, the trade deficit and business activity. Fed speakers Raphael Bostic and James Bullard are also scheduled to speak.
On Friday, investors will review the December jobs report for updated employment and hourly wage data. Since the report could have a big impact on the Fed’s next moves, it has the potential to affect the market. Investors don’t want to see big gains in wage growth, which could signal higher inflation.