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Wall Street Opens Mostly Lower After Strong ADP Report; Dow Flat

© Reuters.

By Geoffrey Smith — U.S. stock markets opened mostly lower on Wednesday, as markets absorbed  a strong-looking report on private-sector hiring that did little to calm nerves about the pace of monetary policy tightening this year.

Payrolls processor ADP (NASDAQ:ADP) reported that private-sector companies added another 806,000 jobs in the month through mid-December, with little sign of an impact from the latest seasonal wave of Covid-19 infections. That was the strongest monthly rise since May and bodes well for the official labor market report on Friday – even if the two reports have diverged since the start of the pandemic. 

“It looks as though December survey week fell in something of a sweet spot, after the Delta wave faded but before the Omicron surge began,” said Ian Shepherdson, chief economist with Pantheon Macroeconomics, in a note to clients. Shepherdson thinks the overall nonfarm payrolls number for December will top 1 million, rather than the 424,000 consensus forecast.

Tightness in the labor market was also in evidence in the less-closely watched Markit Services PMI, where the subindex for input costs hit a new record high. Labor is typically the biggest input cost of many services businesses.

By 9:45 AM ET (1445 GMT), the Dow Jones Industrial Average was effectively flat, losing a mere 5 points to 36,795 points. The S&P 500 was down more clearly, by 0.2%, and the Nasdaq Composite, which has underperformed as rising bond yields put pressure on ‘long-duration’ tech stocks, was down another 0.6%.

At 2 PM ET (1900 GMT), the Federal Reserve will release the minutes from its December policy meeting, when it decided to speed up the winding down of its bond buying program and set a course for interest rate increases this year.

Concerns about tech valuations were evident in declines in Salesforce (NYSE:CRM) stock and Adobe (NASDAQ:ADBE) stock after UBS downgraded both to ‘neutral’, saying that business software growth is slowing. Salesforce traded at 135 times 2020 earnings as of Tuesday’s close, while Adobe traded at a multiple of 55 times. 

Going in the other direction was Pinterest (NYSE:PINS) stock, one of last year’s fallen angels, after brokerage Piper Sandler predicted a robust rebound for the stock in 2022. Pinterest stock rose 2.1%.

Beyond Meat Inc (NASDAQ:BYND) stock was another early gainer, rising 5.3% after KFC owner Yum! Brands (NYSE:YUM) said it would offer Beyond Meat chicken products in KFC restaurants. 

Elsewhere, Uranium Energy (NYSE:UEC) rose 9.5% as civil unrest in Kazakhstan, one of the world’s biggest uranium exporters, cast doubt over the stability of operations at key facilities there. Workers have also gone on strike at Kazakhstan’s biggest onshore oilfield at Tengiz, operated by an affiliate of Chevron . Chevron (NYSE:CVX) stock shrugged off the developments, however, rising 1.6% as crude prices rose in response to other signs that OPEC will again not deliver on its promised output increase in February.

Wall Street Opens Mostly Lower After Strong ADP Report; Dow Flat

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