US stocks are weakening ahead of a key labor market report that should pave the way for further aggressive rate hikes by the Fed.
US Data
So it begins. The labor market is cooling as private payrolls clearly showed a more conservative pace of hiring. ADP’s new methodology was in place and showed job growth slowed for a second-consecutive month as companies added the fewest jobs since early 2021.
After taking a month, the ADP report showed that the change in US private employment rose by 132,000, down from the prior month when the economy created nearly 270,000 jobs.
Expectations are still mostly optimistic for Friday’s nonfarm payroll report, which is expected to see 300,000 jobs created in August. The consensus range for the headline NFP result is between 75,000 and 452,000 jobs. The unemployment rate is expected to remain steady at 3.5%, which the Fed will closely watch as they expect it to rise significantly over the coming months.
A slower pace of hiring still gives the Fed the green light for more aggressive rate hikes over the next couple of FOMC meetings.
China
China’s PMI data confirms the economy is weakening quickly due to COVID lockdowns, intense heat waves, a troubling property crisis, and the global energy crisis lingers.
The official manufacturing PMI increased from 49.0 to 49.4, a slight beat of the 49.2 consensus estimate. Factory activity remains in contraction territory and might struggle to recapture the 50-point mark next month.
The PBOC will need to do more to revive growth, but they will resist aggressive easing. They might also allow the yuan to depreciate a little more.
Snap
Snap (NYSE:SNAP) shares are rising after announcing a major restructuring. Snap will cut about 20% of its workforce and discontinue many investments as they try to save $500 million annually. Snap’s struggles might become a similar story that gets told across corporate America.
Bitcoin
Bitcoin is hovering around the $20,000 level despite global stock market weakness. The next major move for bitcoin will likely come after the nonfarm payroll report, which could show signs of cooling and prompt a short-term relief rally.