The primary U.S. stock indexes experienced a notable increase on Wednesday as investors, traders, and speculators assessed a fresh batch of employment data, which has raised optimism for a potential rate cut by the Federal Reserve. As the earnings season nears its conclusion, market participants are feeling encouraged by the latest developments.
The ADP National Employment Report indicated a decline in private-sector payrolls by 32,000 in November, contrasting with a forecast that anticipated the addition of 40,000 jobs, according to FactSet. The probability of the central bank implementing a 25 basis point reduction in the federal funds rate during next week’s meeting is now at 89.0%, up slightly from 88.0% on Tuesday, based on CME FedWatch data.
Nela Richardson, Chief Economist at ADP, described the hiring landscape as “choppy,” attributing the decline to cautious consumer spending and an uncertain macroeconomic environment. The recent downturn marks the third decrease in four months for private-sector payrolls, raising concerns as it follows a revised gain of 47,000 jobs in October. BMO Capital Markets Senior Economist Sal Guatieri pointed out that the overall weakness appears widespread across various sectors, particularly affecting small businesses, which have now reduced their workforce for four consecutive months. He noted, “This might reflect smaller firms struggling more to adapt to tariff-related supply disruptions.”
Guatieri also commented on the timing of the BLS’s official November jobs report, stating that it would not be available before next week’s Fed policy decision. Nevertheless, he suggested that the ADP report might provide sufficient justification for the more dovish members of the Federal Reserve to support another rate cut amid the influence of some hawkish regional presidents.
On the corporate front, UnitedHealth Group emerged as the standout performer within the Dow Jones Industrial Average, registering a 4.7% increase after Roundhill Investments launched a new exchange-traded fund focused on generating weekly income from the stock. By the time the market closed, the Dow Jones had increased by 0.9% to 47,882, the S&P 500 had risen by 0.3% to 6,849 after starting lower, and the Nasdaq Composite rallied by 0.2% to settle at 23,454.
American Eagle Outfitters experienced a striking 15.1% surge in its stock following a positive fiscal third-quarter report that exceeded expectations. The retailer’s earnings reached 53 cents per share, marking a 29.3% increase year-over-year, alongside sales of $1.36 billion, which increased by 5.7% from a year earlier. Analysts had anticipated earnings of 43 cents per share on revenue of $1.32 billion. CEO Jay Schottenstein expressed confidence in the company’s momentum, indicating a strong start to the holiday season with record-breaking sales following Thanksgiving.
In contrast, some tech stocks struggled to maintain momentum. Companies such as Asana, Box, Marvell Technology, and Okta posted solid gains after reporting their earnings and issuing guidance. However, CrowdStrike faced fluctuations, ultimately closing higher after dipping earlier. In contrast, GitLab and Pure Storage saw significant declines, with GitLab dropping 12.8% due to a revenue figure that, despite surpassing expectations, was perceived as “more modest than expected.” Meanwhile, Pure Storage fell by 27.3%, despite beating revenue estimates, as analysts expressed concerns over the company’s lack of a meaningful forecast for sales to its hyperscaler customers, including Meta Platforms.
The trading day concluded with a mix of optimism and caution, as investors continue to navigate the dynamics of the employment market against a backdrop of changing monetary policy and corporate performance.
