Stocks were on track to pull back from record highs on Wednesday, Oct. 4, even after private payrolls added more than 100,000 jobs in September.
Dow Jones Industrial Average futures were down 0.05%, S&P 500 futures declined 0.07%, and Nasdaq futures dipped 0.09%. Benchmark indexes ended the previous day at new records — the Dow for its second day in a row, the Nasdaq its third, and the S&P 500 its fourth.
Private payrolls in the U.S. added 135,000 jobs in September, according to the latest ADP employment report. This marked a sharp slowdown from the 237,000 jobs added in August. Analysts expected a slightly higher rate of 140,000 jobs. The slowdown can be partially attributed to a series of hurricanes that swept across the U.S. in early September.
Weekly jobless claims have already shown the initial impact of hurricanes Harvey, Irma and Maria with the number of new applications for unemployment benefits seeing an uptick in recent weeks.
The ADP jobs report acts as a preview for the official U.S. jobs report out on Friday. Economists surveyed by FactSet anticipate 75,000 jobs to have been added to the U.S. economy in September, a sharp slowdown from the 156,000 jobs added in August. The measure has not fallen below the 100,000 mark since March and has only been below that threshold four times in the past five years.
Outside of the labor market, the ISM non-manufacturing index for September will be released mid-morning.
Investors will also get another chance to elucidate Federal Reserve Chair Janet Yellen’s thinking on the future path of rate hikes on Wednesday. Yellen is set to deliver the opening remarks at the Community Banking in the 21st Century Conference in St. Louis, late Wednesday afternoon.
Last time Yellen spoke on the economy, investors left puzzled. In comments in the past week, Yellen took a far more dovish tone but kept the possibility of an interest rate hike in December alive.Previous comments from the Fed following its September meeting made the possibility of a December rate hike far more certain. Investors are confident the Fed will move by the end of the year — a December hike has a 76% chance, according to CME Group fed funds futures.
On Capitol Hill, former Equifax Inc. (EFX) Chairman and CEO Richard Smith heads out for day two of congressional testimony on the data breach that exposed the personal data of nearly half the U.S. population. A day earlier, Smith said he takes “full responsibility.” He said the failure to implement a software patch in March and an unsuccessful digital search for vulnerabilities were to blame.
Separately, the Internal Revenue Service awarded the credit-rating agency a $7.25 million contract to prevent fraud. A contract award for Equifax’s data services to verify taxpayer identity and assist in identification verification and validations was posted on the Federal Business Opportunities database on Saturday, Sept. 30. The order was issued to prevent a lapse in identity checks while officials resolve a dispute over another contract. LexisNexis Risk Solutions and TransUnion are listed as interested vendors.