The U.S. stock market declined on Wednesday because private payrolls unexpectedly decreased which created doubts about labor market health and investors continued to monitor trade tensions before President Donald Trump’s tariff deadline.
The ADP employment report revealed private sector jobs decreased by 33,000 in June contrary to the projected 95,000 increase. The employment data triggered traders to increase their expectations of a July Federal Reserve rate cut which now exceeded 25% according to LSEG.
The market experienced a confidence drop because some economists dismissed the report’s importance despite its weak correlation with official employment statistics. According to Ross Mayfield of Baird the data indicates white-collar job weakness if the seasonal pattern does not apply.
The market awaits the official June employment report which will be released on Thursday to show reduced job creation and a small increase in unemployment rates. The markets will be closed on Friday to observe Independence Day.
The market experienced negative sentiment because of trade-related issues. Trump eliminated the possibility of extending his July 9 tariff deadline which created uncertainty about Japan trade negotiations but he maintained positive expectations for an agreement with India. The European Union trade officials maintain ongoing discussions with Washington about trade matters.
