S&P 500; US Indexes Fundamental Daily Forecast – Pressured by North Korean Concerns, ADP Jobs Report

The three major U.S. stock indexes are under pressure early Thursday, pointing towards a lower cash market opening. Investors are responding to overnight developments regarding North Korea and ahead of fresh U.S. economic data.

Banking stocks are likely to be most sensitive to the reports because of their impact on interest rates. Energy stocks will respond to crude oil prices and the U.S. Energy Information Administration’s inventories report.

Traders will get a chance to react to the ADP private-sector payrolls report at 1215 GMT. The report is expected to show 185,000 private sector jobs were added to the economy in June. Traders often use this report to gauge the outcome of Friday’s headline number in the U.S. Non-Farm Payrolls report. This report is expected to show the economy added 179,000 jobs.

The government is also expected to release trade balance data for May and ISM manufacturing index for June. Both are scheduled for 0200 GMT.

The Trade Balance report is expected to come in at -46.3 billion, a slight improvement from -47.6B. ISM Non-Manufacturing PMI is expected to drop slightly from 56.9 to 56.5.

Weekly Unemployment Claims are forecast at 243K, down slightly from 244K.

Investors will also be watching the remarks of San Francisco Fed President John Williams, Fed Governor Jerome Powell and Vice Chairman Stanley Fischer. In light of the release of the minutes from the Fed’s June monetary policy minutes on Wednesday, investors will be listening for clues as to the timing of the next rate hike and the start of the trimming of the Fed’s balance sheet.

Early in the session, the markets in Asia closed lower in reaction to yesterday’s drop in crude oil prices. They showed very little reaction to the Fed minutes.

Investors are saying position-squaring ahead of today’s reports is driving the price action but concerns over an escalation of the situation over North Korea may be the actual reason for the setback. I don’t think the economic data is going to have too much of an impact on prices today. I feel that investors won’t be willing to commit to either side of the market ahead of Friday’s Non-Farm Payrolls report.