Stock Futures Rise as Investors Await ADP Jobs Market Data

The major U.S. stock index futures are edging higher on Wednesday as investors await the release of key labor market and growth reports. However, the major event will be an afternoon speech from Federal Reserve Chair Jerome Powell that is expected to give further insight into future rate hikes.

At 11:38 GMT, Dow Jones Industrial Average futures are trading 33868.00, up 11.00 or -0.03%. The S&P 500 Index futures contract is at 3967.25, up 5.25 or +0.13% and the Nasdaq Composite Index is trading 11554.50, up 29.75 or +0.26%.

Investors Bracing for ADP Private Payrolls Report

Investors are hoping today’s ADP Non-Farm Employment Change report gives them some insight into the state of the U.S. labor market in advance of Friday’s big payrolls report.

The ADP jobs reading is due Wednesday at 13:15 GMT. Economists polled by Dow Jones anticipate that private employers grew their payrolls by 190,000 positions in November, a decline from October’s increase of 239,000.

Powell Could Provide Hints about Magnitude of Future Interest Rate Hikes

Federal Reserve Chairman Jerome Powell is due to speak at a Brookings Institution event at 18:30 GMT about the outlook for the U.S. economy and the labor market. Investors will be looking for clues about when the Fed will slow the pace of its aggressive interest rate hikes.

Futures market traders are expecting the Fed to deliver a smaller 0.50 percentage point rate hike on December 14 after four consecutive 0.75 percentage point increases to tame high inflation.

Yield Curve Spread May Be Signally Recession Ahead

A key part of the yield curve closely watch by Wall Street investors and analysts alike inverted further on Tuesday, potentially signaling a recession ahead. The yield curve inversion between the 2-year and 10-year Treasurys widened yesterday.

What this inversion signals is that the Fed may have tamed inflation enough to cool down the economy and may be able to pause or pivot soon. It can be read as a sign that a recession is on the horizon.

Stocks Attracting Attention in the Premarket Session

A pair of stocks are trading weaker during the premarket session after releasing earnings results that missed Wall Street’s expectations.

Shares of Crowdstrike Holdings plunged more than 18% after giving light guidance for fourth-quarter revenue, even though its earnings results topped Wall Street estimates.

NetApp stock fell 10.8% after the cloud services and data management provider saw weaker-than-expected revenue in its latest quarter.

Short-Term Outlook

Traders are likely to react positively ahead of the cash market opening if the ADP jobs report shows fewer than expected jobs were created in the private sector in November. Ahead of the report, traders are looking for a reading of 190K.

A lower-than-expected reading will take the pressure off the Fed to raise rates aggressively, thereby solidifying the chances of a 50 basis point rate hike in December.

Early gains could be limited, however, because of the uncertainty ahead of Fed Chair Powell’s speech at 18:30 GMT.