Wall Street subdued ahead of jobs data, Good Friday holiday

By YURI KAGEYAMA and MATT OTT
AP Business Writers

Wall Street was subdued early on the last day of trading this week as investors awaited Thursday’s weekly unemployment figures with the more significant government jobs report coming when markets are closed on the Good Friday holiday.

Futures for the Dow Jones Industrial Average were up less than 0.1%, as were futures for the S&P 500.

Two jobs-related reports this week showed that the labor market may finally be cooling, more than a year after the Federal Reserve began its aggressive campaign to bring down inflation by raising interest rates.

ADP’s private payroll report on Wednesday said private employers added 145,000 jobs in March, down sharply from February’s 261,000. Perhaps more importantly for markets, pay raises also weakened for workers, according to the ADP Research Institute.

ADP’s private payroll report could offer a preview of what Friday’s more comprehensive jobs report from the U.S. government will show. Economists expect it to say employers added 240,000 jobs last month, down from 311,000 in February.

If the job market really is slowing from the strong growth that’s helped to prop up the larger economy recently, it could offer the Fed reason to pause on its hikes to interest rates.

That’s a big deal for markets not only because it could lessen the odds of an upcoming recession, which some economists already see as a high probability. Higher rates also drag on prices for stocks, bonds and other investments.

Other reports on the economy this week also came in weaker than expected, including readings on the number of job openings across the country and the health of the manufacturing sector.

The reports have traders increasing bets for the Fed to hold rates steady at its next meeting in May, which would be the first time that’s happened in more than a year. Many traders are also betting the Fed will have to cut rates later this year, something that can act like steroids for markets.

The Fed, though, has consistently said it doesn’t expect to cut rates this year.

In equities trading, Costco dipped more than 2% after the warehouse membership retailer reported that same-stores sales declined in March as consumers pulled back spending on big-ticket items.

In Europe at midday, France’s CAC 40 rose 0.3%, Germany’s DAX climbed 0.4% and Britain’s FTSE 100 was up 0.7%.

Japan’s benchmark Nikkei 225 shed 1.2% to finish at 27,472.63. Australia’s S&P/ASX 200 slipped 0.3% to 7,219.00. South Korea’s Kospi fell 1.4% to 2,459.23. Hong Kong’s Hang Seng gained 0.3% to 20,331.20. The Shanghai Composite declined 0.3% to 3,312.63.

While efforts to cool inflation by raising interest rates are designed to slow overheated economies, the worry is that central bank policymakers might overdo it, leading to recession.

Many regional economies are seeing weakness in exports due to softer demand in major markets like the United States. That has dulled the impact of a rebound in China as its economy recovers from pandemic-related disruptions.

“We’re expecting strong retail activity data for March. But weaker export demand should drag on GDP. The government could provide stimulus to the economy after the release of the first quarter GDP data on 18 April,” Iris Pang, chief economist for ING said about the Chinese economy.

A report from the Institute for Supply Management said that growth in the U.S. services sector slowed last month by more than economists expected, as the pace of new orders cooled.

In other trading, benchmark U.S. crude inched up 10 cents to $80.71 a barrel in electronic trading on the New York Mercantile Exchange. It lost 10 cents to $80.61 on Wednesday. Brent crude, the international standard, rose 20 cents to $85.19 a barrel.

The U.S. dollar inched ticked up to 131.53 Japanese yen from 131.30 yen. The euro cost $1.0904, down from $1.0908.

On Wednesday, the benchmark S&P 500 dipped 0.2% and the Dow industrials rose 0.2%. The Nasdaq composite dropped 1.1%.

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Kageyama reported from Tokyo; Ott reported from Silver Spring, Maryland.