US stocks choppy as data shows drop in labour costs

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Note: Figures recorded at 7:45am AEDT. The closing figures and video recording will be available at 9:00am AEDT.

US stocks wavered on Wednesday as investors assessed data indicating falling inflation, while the jobs report loomed.

The Dow Jones industrial Average lost 59 points, or 0.1%. The S&P 500 and Nasdaq Composite shed 0.3% and 0.5%, respectively.

Stocks cooled from earlier advances, with the Dow at one up point up nearly 170 points. All three indexes have traded both above and below their respective flatlines in the choppy session.

The market got a morning boost after data showed a drop in labour costs boded positively for the path of inflation, while a jump in productivity signalled the potential for the economy to skirt a recession. Private payroll data from ADP offered the latest indication that the job market, long considered a pain point for the Federal Reserve, was easing.

But Wednesday’s ADP report is just one in a string of labour-focused data releases expected over the course of the week. On Tuesday, Labor Department data showed job openings in October fell to the lowest level since March 2021. Investors will monitor jobless claims numbers on Thursday before turning attention to widely followed data on nonfarm payrolls, wages and the unemployment rate due Friday.

Labour costs also fell more than economists expected, while productivity increased at a higher rate than anticipated, new government data showed.

Wednesday’s moves follow back-to-back losses for the Dow and S&P 500. The declines raised questions around whether the late 2023 rally was taking a pause or if the market had run up too far, too fast.

Cloud company Box tumbled more than 9% after reporting third-quarter results that came in below analyst expectations. On the other hand, homebuilder stock Toll Brothers gained almost 3% after exceeding expectations on the top and bottom lines.

In commodity-related news, US oil prices dropped nearly 4%, falling below $70 per barrel, while Brent crude fell over 3%, dropping below $75 per barrel. Despite the oil market's volatility, Goldman Sachs maintains an outlook for Brent to range between $80 and $100 per barrel in 2024 due to solid demand growth, a slowdown in U.S. supply growth, and low OPEC+ supply.
Shifting to US sectors, Energy stocks dragged down the S&P 500 by 1.8% due to a decline in oil prices, making it the worst-performing sector among the 11 that make up the index. Halliburton, EQT, Baker Hughes, Schlumberger, and Marathon Petroleum experienced drops of more than 3%, while Kinder Morgan was the only exception, gaining 0.3%.

Figures around the globe

European markets closed higher. London’s FTSE added 0.34 per cent, Frankfurt gained 0.75 per cent, and Paris closed 0.66 per cent higher.

Turning to Asian markets, Tokyo’s Nikkei gained 2.04 per cent, Hong Kong’s Hang Seng added 0.83 per cent while China’s Shanghai Composite closed 0.11 per cent lower.

The Australian share market closed 1.65 per cent higher at 7,178.35.

Hancock & Gore (ASX:HNG) is paying 1 cent fully franked
Midway (ASX:MWY) is paying 5 cents fully franked

Dividends payable

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.

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