Investing.com – Wall Street traded lower on Wednesday despite better-than-expected employment data as traders prepared to shut their books for August and eyed a close to 3% drop in oil prices after official inventory data.
At 15:37GMT, or 11:37AM ET, the Dow 30 lost 73 points, or 0.40%, the S&P 500 shed 10 points, or 0.44%, while the tech-heavy Nasdaq Composite traded down 17 points, or 0.33%.
With the summer trading season coming to an end, the S&P 500 was on track to close out August with a monthly loss of less 0.5% in what has been a month of low volume and low volatility.
U.S. stocks have traded in a tight range throughout the summer months with the last time the benchmark index having made a move of more than 1% on July 8.
Many analysts expected the mood to be quiet at the beginning of September despite the return of traders as they waited to see the highly anticipated August jobs report on Friday.
On Wednesday, U.S. non-farm private employment fell less than expected in August, boosting optimism over the health of the labor market, according to payroll processing firm ADP.
While not viewed as a reliable guide for the government jobs report due on Friday, September 2, it does give guidance on private-sector hiring.
Consensus is expecting Friday’s official employment report for August to show the creation of 180,000 nonfarm payrolls (NFPs).
In other economic data out on Wednesday, the pending home sales index rose by a better than expected 1.3%, more the double the 0.6% forecast, to its second highest reading this year.
On the downside, the Institute for Supply Management (ISM) said its Chicago purchasing managers’ index decreased by 4.3 points to a seasonally adjusted 51.5 this month from a reading of 55.8 in July. Analysts had expected the index to drop 1.8 points to 54.0 in July.
With four of the five subindices showing a decline, the caveat was that readings were not as weak as earlier in the year and employment increased, hitting a 16-month high.
Apart from the data, investors were also pricing in comments from members of the Federal Reserve (Fed) into their expectations for when the central bank would return to policy normalization.
Boston Fed president Eric Rosengren suggested on Wednesday that the U.S. central bank would soon reach its goals on employment and inflation and suggested that a faster increase in interest rates could help stave off risks to the economy.
In a more dovish stance, Chicago Fed chief Charles Evans said he was concerned that U.S. economic growth has slowed permanently, suggesting that interest rates could remain low for a prolonged period. However, Evans noted that the Fed could normalize policy much faster than currently envisioned and still be able to keep the pace gradual enough to avoid a disorderly change in financial conditions.
Minneapolis Fed president Neel Kashkari later said that he wanted core inflation to rise before embarking on a rate hike, insisting that he needed more data.
Fed fund futures priced in the possibility of a rate hike for the September meeting at 27%, while odds for a move in December were 55.4%, according to Investing.com’s Fed Rate Monitor Tool.
In oil markets, prices took a beating on Wednesday, falling around 3% with West Texas struggling to maintain the $45 mark, as U.S. crude stockpiles rose more than expected.
The U.S. Energy Information Administration said in its weekly report that crude oil inventories rose by 2.3 million barrels in the week ended August 26. Market analysts' expected a crude-stock gain of 921,000 barrels, while the American Petroleum Institute late Tuesday reported a supply increase of 942,000 barrels.
U.S. crude futures tumbled 2.91% to $45.00 by 15:38GMT, or 11:38AM ET, while Brent oil slumped 3.02% to $47.26.
In active movers on earnings, H&R Block (NYSE:HRB) tumbled more than 12% after the tax services provider reported a wider-than-expected loss.
Palo Alto Networks (NYSE:PANW) slumped almost 8% after the cybersecurity firm provided a downbeat outlook for the current quarter.