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US stocks drift lower after strong ADP jobs data; Powell set to speak


Investing.com–U.S. stocks drifted lower Wednesday, after data showed continued strength in the labor market added to the ongoing uncertainty over the Federal Reserve’s plans to cut interest rates. 

At 09:35 ET (13:35 GMT), Dow Jones Industrial Average fell 13 points, or 0.1%, S&P 500 fell 4 points, or 0.1%, while Nasdaq Composite fell 40 points, or 0.3%. 

ADP data adds to rate cut uncertainty  

Data released earlier Wednesday showed that the U.S. private sector added far more jobs than expected in March, as private sector employment increased by 184,000 jobs last month, according to payrolls processor ADP.

This was the largest increase in hiring since July, above the 148,000 expected, with job gains strong across industries with the exception of professional services.

The main Wall Street indexes have started the new month, and quarter, on the backfoot, as a series of hawkish comments from top Fed officials saw markets price out some expectations of early interest rate cuts by the central bank.

While the Fed had struck a somewhat dovish tone during its March meeting, a slew of officials speaking after the meeting warned that sticky inflation and strength in the labor market could keep the bank from cutting interest rates early this year.

There are a number of Fed speakers due later in the session, including Chair Jerome Powell, while nonfarm payrolls data for March, due this Friday, is expected to show sustained strength in the jobs market, especially after the ADP release.

Traders have cut their expectations for a 25 basis point rate cut in June, according to the CME Fedwatch tool, with the July meeting now the nearest that a 25 basis point cut has been full priced in.. 

Fears of higher-for-longer interest rates saw Wall Street indexes retreat over the past two sessions from near record highs. 

Intel slumps after foundry losses weigh 

Intel (NASDAQ:INTC) slid nearly 7% after it disclosed $7 billion in operating losses for its foundry business through 2023, as it lost out more business to Asian rivals including TSMC (NYSE:TSM) and Samsung Electronics Co Ltd (KS:005930). 

Tesla (NASDAQ:TSLA) fell 0.6%, extending losses after a 4.9% slide on Tuesday after the electric vehicle maker clocked a quarterly decline in deliveries for the first time in nearly four years.

Taiwan Semiconductor Manufacturing (NYSE:TSM) stock fell 0.4% after a severe earthquake on the island prompted the chip maker to halt production at some of its facilities.

On the flip side, Paramount Global (NASDAQ:PARA) gained 0.8% after a report said the media giant has been discussing entering into talks with David Ellison, the founder of the Skydance media company, for a potential deal.

Cal-Maine Foods (NASDAQ:CALM) stock rose 4.8% after the chicken egg producer reported strong quarterly results, as record sales overcame falling egg prices.

OPEC+ maintains current output levels 

Oil prices rose to five-month highs Wednesday, as OPEC+ maintained reduced output levels, ensuring that global supplies remained tight.

By 09:35 ET, the U.S. crude futures traded 0.5% higher at $85.61 a barrel and the Brent contract climbed 0.7% to $89.51 per barrel, both trading near their highest levels since October.

A meeting of the top ministers of the Organization of the Petroleum Exporting Countries and allies led by Russia, known as OPEC+, decided to keep its crude output levels unchanged earlier Wednesday.

Oil has rallied this year, driven by tighter supply, attacks on Russian energy infrastructure and war in the Middle East.

Additionally, data from the American Petroleum Institute on Tuesday indicated that U.S. crude inventories shrank nearly 2.3 million barrels in the week to March 28 – more than expectations for a draw of 2 million barrels.

While the reading comes after an outsized, 9.3 million barrel build in the prior week, it is also the third weekly draw in inventories over the past four weeks.

Official data from the Energy Information Administration are due later in the session. 

(Ambar Warrick contributed to this article.)

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