This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
The Dow Jones finished up 0.38% or 56 points at 14,988.55, while the S&P 500 and NASDAQ also finished moderately higher, in a short, choppy trading session that saw the Dow whipsaw from as low as 14, 858 to as high as 15,025.
15,000 has proven to be something of a battleground, with bears so far managing to defend the high ground and repelling any attempt to advance well beyond this point.
Economic data today provided no clear message about the health of the US economy, with employment data in the plus column, but a ballooning trade deficit and a disappointingly low ISM non-manufacturing reading balancing things up in the minus column.
The ADP employment report estimated 188,000 payrolls were added to private employment during June, exceeding the consensus of expectations and showing an impressive improvement from May’s 134,000. Initial jobless claims came in at 343,000, showing a small improvement from the 348,000 recorded for the week prior.
Despite both of these reports, I don’t think this really changes the landscape ahead of Friday’s official employment figures. The ADP report has not proved to be a great indicator of non-farm payrolls so far this year and 188,000, while a nice bounce from May, is far from an exceptional number.
A Thomson-Reuters survey forecasts the unemployment rate to improve from 7.6% to 7.5% in June, but I wouldn’t be too surprised to see the rate remain unchanged. Even at 7.5% I think the Fed will be unconvinced that improvements in the labour market are sufficient to justify tapering in the near future.