- ADP, productivity, trade data misses forecasts
- ECB meeting, non-farm payrolls in focus
- FuelCell Energy, TIBCO Software drop sharply
Dow Jones: -0.22%
S&P 500: -0.12%
US stocks were struggling for direction on Wednesday as investors digested a string of disappointing economic data and showed caution ahead of some key 'risk events' later that could spark some market volatility.
Private-sector hiring slowed more than forecast in May, according to data released before the opening bell, while labour productivity and trade figures also came in worse than expectations.
The figures prompted the Dow Jones Industrial Average and S&P 500
to fall around 0.1-0.2% in early trading as investors continued to take profits after both indices recently hit record highs. The Nasdaq, meanwhile, was flat.
Trading started off on the back foot as stocks tracked a subdued performance across Europe ahead of the pivotal European Central Bank meeting on Thursday which could see policymakers unleash new measures to stave off deflation and stimulate growth. Nervousness ahead of the all-important US non-farm payrolls report on Friday was also another reason for investors to keep their powder dry.
ADP, productivity, trade data disappoints
Private-sector payrolls increased at the slowest pace in four months in May, according to a report by Automatic Data Processing (ADP). Just 179,000 private payrolls were added last month, down from the 215,000 gain registered in April and below the 210,000 consensus estimate.
The ADP numbers, often seen as a rough guide to the government's 'official' employment report on Friday, "adds to the downside risk to our forecast that official payroll employment rose by around 230,000 in May", according to Paul Dales, Senior US Economist at Capital Economics. However, he admitted that the ADP survey is not as reliable a predictor of non-farm payrolls as it used to be.
In other economic data, US non-farm business sector labour productivity in the first quarter of 2014 was revised lower to show an annual fall of 3.2%, the Bureau of Labor Statistics said, as hours increased by 2.2% and output declined 1.1%. This was the largest drop in productivity since the first quarter of 2008.
Meanwhile, the US trade deficit increased by 6.9% to $47.2bn in April, its highest in two years, according to the Commerce Department. This was up from a revised $44.2bn in March and surprised analysts looking for a fall to $40.6bn.
FuelCell and TIBCO sink early on
Fuel-cell power group FuelCell Energy sank as much as 14% after losses in its second quarter more than doubled to $15.8m, worse than analysts' expectations. Revenues fell slightly from $42.4m to $38.3m, while operating expenses increased.
TIBCO Software also dropped sharply after missing forecasts with its fiscal second-quarter results, prompting analysts at JMP Securities and Stifel Financial to downgrade their recommendations on the shares.
Japanese group Dai-ichi Life Insurance said it would buy Protective Life Corp for around $5.7bn, causing shares
in the US-listed life insurer to surge.