US stocks choppy as data shows drop in labour costs

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

The Dow Jones industrial Average lost 70.13 points, or 0.19 per cent, to close at 36,054.43. The S&P 500 shed 0.39 per cent to 4,549.34, while the Nasdaq Composite dropped 0.58 per cent to 14,146.71.

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 marked the third straight losing session for the Dow and S&P 500. Those declines raised questions around whether the late 2023 rally was taking a pause or if the market had run up too far, too fast. Still, the three major indexes remain poised to finish the fourth quarter and calendar year higher.

Shifting to US sectors, Utilities, Industrials and Health all closed higher. Energy stocks dragged down the S&P 500 by 1.6 per cent due to a decline in oil prices, making it the worst-performing sector among the 11 that make up the index.

Halliburton, EQT, and Marathon Petroleum experienced drops of more than 3 per cent, while Kinder Morgan was the only exception, gaining 0.2 per cent.

The oil prices in US dropped nearly 4 per cent, falling below $70 per barrel, while Brent crude fell over 3 per cent, 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.

Futures

The SPI futures are pointing to a 0.5 per cent fall.

Currency

One Australian dollar at 8:25 AM was buying 65.49 US cents.

Commodities

Gold has added 0.40 per cent. Silver has lost 1.12 per cent. Copper has fallen 1.40 per cent. Oil has dropped 4.22 per cent.

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.

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

Dividends payable
CSR Ltd (ASX:CSR)

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

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