Market Force Fed a Pile of Economic Data on Abbreviated Trading Day Wednesday

Andrew Klips |

Stock futures were running lower Wednesday morning in a shortened trading day before that Independence Day holiday on Thursday as soft economic data was delivered in China, tempers are flaring in Egypt and economic unrest surfaced in Portugal. Upbeat jobs data in the U.S., though, has helped pare those loses ahead of the opening bell.

Automatic Data Processing Inc. said that the U.S. private sector added 188,000 jobs in June, following a downwardly revised 134,000 new jobs in May. ADP had originally estimated May's gain at 135,000.

Economists were expecting June to bring 160,000 new private-sector jobs.

Small business added the most jobs in June, according to the report, with 84,000 new jobs. Medium businesses added 55,000 and large businesses generated 49,000. By industry, trade/transportation/utilities led the gains with 43,000 additions, followed by professional/business services with 40,000.

ADP said that the service-providing sector added 161,000 in June, the largest gain since February and above the 146,000 per month average through the first five months of 2013.

"The job market continues to gracefully navigate through the strongly blowing fiscal headwinds. Health Care Reform does not appear to be significantly hampering job growth, at least not so far. Job gains are broad based across industries and businesses of all sizes," said Mark Zandi, chief economist of Moody's Analytics.

Wall Street looks at the ADP National Employment Report, which is a collaborative effort between ADP and Moody's Analytics, as a barometer for the more closely watched non-farms payroll report from the U.S. Labor Department. The government report is comprised of job additions in both the private and public sectors and includes the latest unemployment rate. It is scheduled to be released Friday morning. Last month the Labor Department reported that the nation added 175,000 new jobs in May. Economists predict 158,000 new jobs were added in June and that the unemployment rate will slip down to 7.5 percent from 7.6 percent in May.

Separately, the Labor Department reported on Wednesday morning that the number of people filing for first-time jobless benefits contracted some in the week ended June 29. The weekly report was pushed forward to Wednesday from its customary Thursday release because of the July 4 holiday.

Initial jobless claims dropped by 5,000 to a seasonally adjusted 343,000 in the latest week. The week prior's estimate was revised upward form an original 346,000 claims to 348,000. Economists were expecting an essentially flat week with the number of claims forecast at 347,500.

The four-week moving average, regarded as a better gauge of the labor market because it irons out weekly volatility, ticked down by 750 from a revised 346,250 the week prior. The Labor Department originally reported the one-month average at 345,750.

In a final chunk of economic data Wednesday morning, the Commerce Department reported that the U.S. trade deficit expanded far more than anticipated in May on a jump in imports while exports were flat.

The trade deficit widened to $45.0 billion in May from $40.1 billion in April, representing the largest trade gap of 2013, thanks to two straight months of increases. In March, the trade deficit had narrowed to near four-year lows at $37.1 billion. A wider trade deficit creates a drag on gross domestic product.

For May, economists expected a modest widening of the trade deficit to about $40.5 billion.

Imports increased by 1.9 percent in May, after rising 2.4 percent in April. Exports decreased by 0.3 percent, following a 1.3 percent increase in April.

For a day when the markets will only be open until 1:00 PM EDT, there was no shortfall of data for the markets to digest. The mix of the expanding trade deficit and better-than-expect reports on the state of the labor markets will be just enough to fuel the controversy about when the Federal Reserve will begin to taper its policy of buying $85 billion worth of Treasuries and mortgage-backed securities each month.

At the opening bell, the Dow has come out down 21 points, the S&P 500 is off by 4 points and the Nasdaq is lower by 12 points.

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