The Day Ahead: Markets Await Today’s ADP Report for Fed Rate Expectations

Market Overview

Stock futures inch higher Wednesday after investors initiated the second half of 2025 with a tech sector rotation. S&P 500 Index futures trade marginally higher, while Nasdaq 100 futures advance 0.3% and Dow Jones Industrial Average futures add 69 points.

Tuesday’s regular session saw the Dow surge 400 points on healthcare and materials strength, while the S&P 500 slipped 0.1% and the Nasdaq Composite dropped 0.8% as traders dumped high-flying technology names.

The information technology sector lost over 1% Tuesday, with communications services also declining as investors rotated away from second-quarter leaders including Nvidia, Palantir, and Advanced Micro Devices.

Healthcare and materials sectors drove gains, with Amgen, Johnson & Johnson, and UnitedHealth lifting the blue-chip index.

Fed Chair Powell’s cautious rate stance continues to influence market sentiment, reiterating plans to “wait and learn more” about tariff impacts on inflation before cutting rates.

Key Economic Releases

ADP Private Payrolls – 12:15 GMT Consensus: 120,000 jobs added (vs. 37,000 prior) This sharp anticipated increase from May’s weak 37,000 gain could signal labor market stabilization ahead of Thursday’s critical Non-Farm Payrolls report. A strong reading would support Fed hawkishness and potentially pressure rate cut expectations.

Central Bank Activity

Federal Reserve Chair Jerome Powell maintains his cautious approach on rate cuts, emphasizing the need to assess tariff impacts on inflation before policy changes. This stance directly contradicts President Trump’s calls for immediate and deep rate reductions, adding to market uncertainty as Trump’s 90-day tariff pause expires next week.

Commodities, Crypto, and Bonds

Gold prices edge lower as investors await U.S. payroll data while weighing Powell’s cautious rate stance. A weaker dollar provides some support for the greenback-priced metal, limiting downside pressure.

Oil futures remain little changed ahead of this week’s OPEC+ meeting to determine August output levels. Chinese factory activity expansion in June boosted demand expectations for the world’s largest oil importer.

U.S. Treasury yields climbed Tuesday after Senate Republicans passed Trump’s tax-and-spending legislation, threatening to add at least $3 trillion to the federal deficit over the next decade. The 10-year yield rose as bond markets digest the fiscal implications, with the House now facing uncertainty over GOP support amid deficit concerns.

Technical Outlook

S&P 500 Index Futures Hold Above Key Support

S&P 500 Index futures last traded at 6,247.75, well above the 200-day moving average at 5,978.19 and the 50-day moving average at 5,931.60. Resistance sits at 6,288.75.

Nasdaq 100 Index Futures Test Recent Highs

Nasdaq 100 Index futures trade at 22,694.50, above the 50-day moving average at 21,350.4 and 200-day moving average at 21,226.83. Resistance at 22,934.75.

Dow Jones Index Futures Consolidate Near Highs

Dow Jones Index futures trade at 44,809, above the 200-day moving average at 43,503 and the 50-day moving average at 42,455.60. Resistance at 46,326.

Outlook

Today’s focus centers on ADP payrolls at 12:15 GMT as a preview to Thursday’s main event jobs report in this holiday-shortened week. The tech sector rotation continues reshaping market leadership as investors reassess valuations entering the second half.

Trump’s fiscal package uncertainty, combined with Powell’s measured Fed approach and expiring tariff pause, creates multiple volatility catalysts.

Healthcare and materials sectors maintain momentum from Tuesday’s rotation, while technology names face continued selling pressure.

Technical patterns across all three major index futures suggest consolidation near key levels as markets digest the employment data changes.

More Information in our Economic Calendar.