Nasdaq 100, Dow Jones, S&P 500: Weaker-Than-Expected Private Payrolls Data Raises Recession Concerns

Highlights

• S&P 500 and Nasdaq drop after weak private payrolls data
• Trade imbalance increases, imports fall
• Market expectations shift to Fed halting interest rate hikes

Overview

On Wednesday, the S&P 500 and the Nasdaq slipped after weaker-than-expected private payrolls data for March raised concerns that rapid interest rate hikes by the Federal Reserve may cause a recession in the US economy.

The broader market index traded down 0.3% lower, while the Nasdaq Composite dropped 0.8%, and the Dow Jones Industrial Average rose 36 points, or 0.1%. supported by outperformance in health care stocks.

Economic Reports

The ADP National Employment report showed that private employment increased by only 145,000 jobs last month, compared with economists’ projections of 200,000 jobs, further suggesting a cooling economy.

The trade imbalance increased to $70.5 billion for February, up $1.9 billion from January and more than the Dow Jones estimate, according to the Commerce Department.

Exports fell to $251.2 billion, a 2.7% decline, as industrial supplies, autos, consumer goods, and capital goods all decreased. Imports fell by $5 billion.

As exports add to GDP and imports subtract, the numbers suggest that economic growth could be weaker than expected in the first quarter.

A report on non-manufacturing activity in March from the Institute for Supply Management is also expected later on Wednesday.

Federal Reserve Expectations

As a result, market expectations have shifted to favor the US central bank hitting the brakes on its interest rate hikes.

Treasury Yields Lower

The US Treasury yields fell on Wednesday, and the potential for further rate hikes from central banks is contributing to market volatility.

Stock Market Sector Performance

Defensive stocks such as healthcare, utilities, and consumer staples were in the green among major S&P 500 sectors.

Stocks on the Move

Major technology and growth stocks such as Meta Platforms Inc, Tesla, and Amazon fell between 0.3% and 1.4%.

Nvidia Corp was one of the top drags on the S&P 500, down 2.2%.

FedEx announced a corporate reorganization and a dividend hike on Wednesday, ahead of an investor event.

The company will raise its dividend by 10%, consolidate its different business divisions, and change its executive compensation packages. The shipping company’s shares rose more than 2% in premarket trading.

Looking Ahead… Short-Term Outlook

Meanwhile, All eyes are now on the non-farm payrolls data for March, a more comprehensive employment report, due on Friday, for further clues on the state of the labor market.