© Reuters. FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., November 17, 2023. REUTERS/Brendan McDermid/File Photo
By Noel Randewich and Amruta Khandekar
(Reuters) – U.S. stocks were mixed on Wednesday as signs of a cooling jobs market reinforced expectations that the Federal Reserve could start cutting interest rates early next year, while weakness in energy shares limited gains.
The ADP National Employment report showed private payrolls increased by 103,000 jobs in November, below economists’ expectation of 130,000. That provided fresh evidence of labor market weakness, a day after news of a drop in October job openings.
The latest employment data reinforced expectations the Fed’s rate-hike campaign is cooling the economy.
“Right now, it’s consistent with the overall trajectory of softening job growth, and so far that’s not problematic because the economy is still humming along,” said Bill Merz, head of capital markets research at U.S. Bank Wealth Management in Minneapolis.
“What would be concerning is if that trend persists for too long, and it turns into large job losses.”
On Friday, the more comprehensive non-farm payrolls report for November will offer greater clarity on the state of the labor market.
Investors widely expect the Fed to hold rates steady at its meeting next week and potentially start cutting rates in March.
A slim majority of economists in a Reuters poll said they believe the Fed will leave rates unchanged at least until July, later than earlier thought.
Optimism about rate cuts helped push the up nearly 9% in November, and the benchmark is now down about 9% from its record high close in December 2021.
Of the 11 S&P 500 sector indexes, six rose on Wednesday, led by utilities, up 0.94%, followed by a 0.69% gain in industrials.
Limiting gains, the energy index slid 1.1% as oil prices fell by 2%. [O/R]
The S&P 500 was down 0.01% at 4,566.88 points, with nearly two stocks in the index gaining for each one that fell.
The Nasdaq declined 0.07% to 14,220.14 points, while the was up 0.12% at 36,169.17 points.
Plug Power (NASDAQ:) fell 3.9% after Morgan Stanley downgraded the hydrogen fuel cell firm to “underweight” from “equal weight.”
Tobacco giants Altria Group (NYSE:) and Philip Morris International (NYSE:) slipped 2.6% and 1.6%, respectively, after UK peer British American Tobacco (NYSE:) said it will take a $31.5 billion hit from writing down the value of some U.S. cigarette brands.
Campbell Soup (NYSE:) rallied 7.2% after the food seller beat quarterly profit expectations, helped by higher prices for its packaged meals and snacks.
The S&P 500 posted 29 new highs and no new lows; the Nasdaq recorded 94 new highs and 73 new lows.
