Stocks, markets mixed as Wall Street deciphers diverging signals

By Lawrence Delevingne

BOSTON (Reuters) -Stocks, Treasuries and other major markets were mixed Wednesday after July data showed that U.S. jobs growth slowed but demand for services increased, all as Federal Reserve officials signaled a likely pullback in market support.

U.S. private payrolls increased far less than expected in July, likely constrained by shortages of workers and raw materials. Employers added 330,000 jobs last month, the ADP National Employment Report showed on Wednesday.

This compared with an increase of 695,000 forecast by economists polled by Reuters.

The Dow Jones Industrial Average fell 316.43 points, or 0.9%, to 34,799.97, the S&P 500 lost 18.54 points, or 0.42%, to 4,404.61, while the Nasdaq Composite added 12.23 points, or 0.08%, to 14,773.53. MSCI’s gauge of stocks across the globe shed 0.10%.

“The market is surprising resilient given the weak ADP numbers and a bond market apparently signaling slower growth ahead,” Nancy Tengler, chief investment officer of Nashville-based asset manager Laffer Tengler Investments, said.

She pointed to the positive growth indicators from manufacturing inventories and demand for services, but cited concern over COVID-19 in China and related economic slow-downs.

The Institute for Supply Management said on Wednesday its non-manufacturing activity index hit 64.1 last month from 60.1 in June, the highest reading in its history.

Strong corporate profits have recently eased concerns over the coronavirus pandemic as vaccine roll-outs continue apace in developed markets. But investors are also weighing inflationary pressures and a growing belief that the Federal Reserve may soon signal its intention to trim support for the economy.

Federal Reserve Vice Chair Richard Clarida said on Wednesday that the U.S. economy is on track to meet the employment and inflation hurdles the Federal Reserve has set for raising interest rates, echoing comments by other officials.

Traders sent U.S. Treasury yields slightly higher, apparently shifting their focus away from the disappointing payroll report.

Ten-year notes last fell 7/32 in price to yield 1.1953%; they previously touched 1.127%, their lowest since February.

Investors are still waiting for the latest U.S. non-farm payroll numbers on Friday – the last before Federal Reserve leaders convene in Jackson Hole, Wyoming, to discuss policy and decide future stimulus strategy.

Oil prices were negative as the spread of the Delta variant of COVID-19 in top consuming countries outweighed Mideast geopolitical tensions and a fall in U.S. inventories.U.S. crude fell 2.93% to $68.49 per barrel and Brent was at $70.73, down 2.32% on the day.

The dollar recovered from a fall on Wednesday brought on by the jobs data. After a steady day, the dollar index against major currencies < =USD> fell as much as 0.2% before turning back up. The dollar index was up around 0.25% as of midday.

Spot gold added 0.1% to $1,810.96 an ounce. U.S. gold futures fell 0.04% to $1,809.30 an ounce.

(Reporting by Lawrence Delevingne; Editing by Dan Grebler and Alexander Smith)

By Lawrence Delevingne

BOSTON (Reuters) -Stocks, Treasuries and other major markets were mixed Wednesday after July data showed that U.S. jobs growth slowed but demand for services increased, all as Federal Reserve officials signaled a likely pullback in market support.

U.S. private payrolls increased far less than expected in July, likely constrained by shortages of workers and raw materials. Employers added 330,000 jobs last month, the ADP National Employment Report showed on Wednesday.

This compared with an increase of 695,000 forecast by economists polled by Reuters.

The Dow Jones Industrial Average fell 316.43 points, or 0.9%, to 34,799.97, the S&P 500 lost 18.54 points, or 0.42%, to 4,404.61, while the Nasdaq Composite added 12.23 points, or 0.08%, to 14,773.53. MSCI’s gauge of stocks across the globe shed 0.10%.

“The market is surprising resilient given the weak ADP numbers and a bond market apparently signaling slower growth ahead,” Nancy Tengler, chief investment officer of Nashville-based asset manager Laffer Tengler Investments, said.

She pointed to the positive growth indicators from manufacturing inventories and demand for services, but cited concern over COVID-19 in China and related economic slow-downs.

The Institute for Supply Management said on Wednesday its non-manufacturing activity index hit 64.1 last month from 60.1 in June, the highest reading in its history.

Strong corporate profits have recently eased concerns over the coronavirus pandemic as vaccine roll-outs continue apace in developed markets. But investors are also weighing inflationary pressures and a growing belief that the Federal Reserve may soon signal its intention to trim support for the economy.

Federal Reserve Vice Chair Richard Clarida said on Wednesday that the U.S. economy is on track to meet the employment and inflation hurdles the Federal Reserve has set for raising interest rates, echoing comments by other officials.

Traders sent U.S. Treasury yields slightly higher, apparently shifting their focus away from the disappointing payroll report.

Ten-year notes last fell 7/32 in price to yield 1.1953%; they previously touched 1.127%, their lowest since February.

Investors are still waiting for the latest U.S. non-farm payroll numbers on Friday – the last before Federal Reserve leaders convene in Jackson Hole, Wyoming, to discuss policy and decide future stimulus strategy.

Oil prices were negative as the spread of the Delta variant of COVID-19 in top consuming countries outweighed Mideast geopolitical tensions and a fall in U.S. inventories.U.S. crude fell 2.93% to $68.49 per barrel and Brent was at $70.73, down 2.32% on the day.

The dollar recovered from a fall on Wednesday brought on by the jobs data. After a steady day, the dollar index against major currencies < =USD> fell as much as 0.2% before turning back up. The dollar index was up around 0.25% as of midday.

Spot gold added 0.1% to $1,810.96 an ounce. U.S. gold futures fell 0.04% to $1,809.30 an ounce.

(Reporting by Lawrence Delevingne; Editing by Dan Grebler and Alexander Smith)