Opening Comment — Wednesday, December 06, 2023
DJIA: 36,124.56, down 79.88
S&P 500: 4,567.18, down 2.60
NASDAQ: 14,229.91, up 44.42
Stocks higher ahead of ADP employment change
Stock futures are higher on Wednesday, as investors await the release of November’s Automatic Data Processing (ADP) employment change and October’s trade balance. The Dow and the S&P 500 are rising 0.1% in pre-market action. The Nasdaq 100 is also up 0.1% relative to fair value on the GLOBEX.
U.S. equities were mixed on Tuesday, with U.S. job openings coming in well below expectations in October. The Dow was down 0.2%, while the tech-heavy Nasdaq Composite rose 0.3%. The S&P 500 decreased 0.1% with eight of 11 sectors finishing in negative territory. The Energy sector declined the most, falling 1.7%.
On the data front today, Mortgage Bankers Association (MBA) mortgage applications increased 2.8% for the week ending December 1 versus the prior week’s increase of 0.3%. The ADP employment change for November is expected to be 130,000, higher than the previous month’s 117,000. The final reading for the third quarter’s non-farm productivity is expected to increase 4.9% versus the prior reading of 4.7%, while the final reading for the third quarter’s unit labor costs is expected decrease an annualized 0.9% versus the prior reading of negative 0.8%. The trade balance for October is projected to record a negative $64.2 billion versus the previous month’s negative $61.5 billion. The Department of Energy (DOE) crude oil inventories are anticipated to decrease by 1.6 million barrels for the week ending December 1 versus the prior week’s increase of 1.6 million barrels.
Across the pond, European stocks are higher in mid-day trading with the eurozone’s retail sales increasing less than projections on a monthly basis. Germany’s factory orders decreased in October, compared to an anticipated increase.
Overnight in Asia, stocks were mostly higher as investors assessed Australia’s third quarter Gross Domestic Product (GDP) data, which increased more than expected on a yearly basis, though less than forecasted on a quarterly basis.
In FOREX trading, the dollar is little changed ahead of October’s trade balance data release.
Over in the commodity pits, West Texas Intermediate (WTI) crude oil is 1.3% lower at $71.40/barrel attributed to ongoing skepticism in the market regarding the effectiveness of OPEC+ (Organization of the Petroleum Exporting Countries and 11 other non-OPEC members) members’ production cuts. Concerns of deteriorating demand from China persist.
In the metals complex, gold is 0.3% higher at $2023.90/ounce.