Wednesday August 4th

4-08-2021

Stock futures fall slightly as GM earnings, ADP payroll report miss expectations

U.S. stock index futures retreated on Wednesday morning after the earnings of a major automaker and a private sector jobs report came in lower than expected. Dow Jones Industrial Average futures were about 153 points lower, or 0.4%. S&P 500 futures slipped by 0.4% while Nasdaq 100 futures were trading down about 0.2%. The S&P 500 broke a 2-day losing streak on Tuesday to post a record close, bringing its 2021 gains to more than 17%. Shares of General Motors fell about 3% in premarket trading, weighing on the broader market, after the automaker missed earnings expectations for the second quarter. The automaker did raise its guidance for a key profit metric for the rest of the year. The ADP private payroll survey showed a gain of 330,000 jobs for July, well short of the consensus estimate of 653,000. The report comes ahead of Labor Department’s official jobs report, which will be released on Friday. The labor market readings come as the delta variant of Covid 19 has spread across the U.S., leading to new restrictions and mandates from some companies and local governments. “The elephant in the room is the Delta variant. It has not prompted major changes in public health restrictions yet but it could make some people nervous about going back to work, especially in those states in which vaccine hesitancy has held back progress,” James McCann, deputy chief economist at Aberdeen Standard Investments, said in a note. “However, it is probably too soon to see the Delta variant really impinging on the data. It is likely to be drowned out by a broader hiring spree at this stage.” The 10-year Treasury yield pulled back to near 1.14% on Wednesday morning, erasing meager gains from the previous session. In recent weeks, lower bonds yields lately have tended to set a more bearish tone for equities, by triggering concerns about the pace of the economic comeback. Treasury Secretary Janet Yellen will say on Wednesday that enacting the trillion-dollar bipartisan infrastructure bill is key to keeping America’s status as the “world’s pre-eminent economic power.” Her comments come as investors await the final details of the bill, which the Senate is currently haggling over. A strong earnings season continued after the bell Tuesday with Lyft and Caesars Entertainment reporting stronger-than-expected results for the second quarter and citing a rebound to pre-pandemic levels of activity. Travel stocks MGM Resorts, Wynn Resorts and Booking Holdings will report after the bell on Wednesday. In the regular trading session on Tuesday, the Dow Jones Industrial Average jumped 278 points, or 0.8%, to 35,116.40. The S&P 500 gained 0.8% to a new all-time closing high of 4,423.15. The Nasdaq Composite rose 0.6% to 14,761.29. On Monday, the stock market was under pressure after the 10-year Treasury yield fell to 1.15% Monday. The decline in the bond yields was driven by concerns about the spread of the delta coronavirus variant and comments by Federal Reserve Governor Christopher Waller, who told CNBC that the central bank could start tapering its bond purchases as early as October. Shares in major Asia-Pacific markets rose on Wednesday, as a private survey showed accelerating Chinese services activity growth in July. Mainland Chinese stocks closed higher, with the Shenzhen component advancing 1.72% to 14,990.11 while the Shanghai composite gaining 0.85% to 3,477.22. Hong Kong’s Hang Seng index closed 0.88% higher at 26,426.55. South Korea’s Kospi advanced 1.34% to finish the trading day at 3,280.38. Stocks in Japan declined as the Nikkei 225 slipped 0.21% to close at 27,584.08 while the Topix index shed 0.5% to finish the trading day at 1,921.43. Oil prices fell for a third day on Wednesday on mounting concerns that the increasing spread of the delta variant of the coronavirus in top consuming countries will cut fuel demand. Brent crude oil futures slid 57 cents, or 0.8%, to trade at $71.82 per barrel. U.S. West Texas Intermediate (WTI) crude fell 79 cents, or 1.1%, to $69.78 per barrel. Both futures fell on Tuesday to their lowest since July 21 before regaining some ground by the close. Gold prices were flat in early Asian trade on Wednesday, with investors awaiting signals from U.S. jobs data on the labor market recovery that could influence the Federal Reserve’s tapering plans. Spot gold was flat at $1,809.21 per ounce by 0114 GMT, while U.S. gold futures fell 0.1% to $1,812.50.