S&P 500 Opens Higher as Weak ADP Data Lifts Rate Cut Expectations
Stocks opened modestly higher Thursday as softer-than-expected private payrolls data bolstered bets that the Federal Reserve could cut rates later this month.
The S&P 500 and Nasdaq Composite each edged up 0.2% in early trading, while the Dow Jones Industrial Average rose 37 points, or 0.1%, held back by a steep decline in Salesforce shares.
Is the Labor Market Cooling Enough for the Fed to Act?
The ADP report showed private sector job growth slowing to just 54,000 in August—well below the 75,000 forecast and down from July’s revised 106,000. Weekly jobless claims also rose more than expected, climbing to 237,000. The data added to recent signs of deceleration in the labor market, prompting traders to raise their bets on a rate cut at the Fed’s September 17 meeting. Fed funds futures now price in a 97.4% chance of a cut, up from 96.6% the day before, according to CME’s FedWatch tool.
Which Sectors Are Leading at the Open?
Consumer Discretionary is pacing early sector gains, up 1.49%, led by a 3.44% jump in Amazon. Financials, Utilities, and Real Estate are also showing strength.
However, Technology is down 0.35% in the opening minutes, weighed by weakness in Salesforce, which is dragging the Dow. Shares of the software giant are down nearly 8% after issuing a Q3 revenue outlook slightly below expectations, despite posting solid Q2 results.
What Else Is Moving the Market?
Traders are also watching Washington after former President Donald Trump asked the Supreme Court to overturn rulings that blocked key tariffs. Any surprise developments on trade could move markets. Attention is also turning to the ISM non-manufacturing PMI report due at 10 a.m. ET. The consensus expects a reading of 50.8, up from 50.1. A miss could further support the case for monetary easing.
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See all NASDAQ 100 forecastsWhat Should Traders Expect from the Jobs Report?
All eyes now turn to Friday’s official nonfarm payrolls report, with expectations set at a 75,000 job gain. Another weak reading could lock in a Fed rate cut and support risk assets. On the other hand, a surprise beat might temper those expectations and lead to a repricing in yields and equities. Traders should stay focused on rate-sensitive sectors and monitor real-time shifts in bond markets for cues.
More Information in our Economic Calendar.
