"The futures are trading modestly higher on Thursday after a rollercoaster session on Wednesday, as stocks fell after the open on weak ADP data showing private-sector employment shed 32,000 jobs in November, the largest in 2-1/2 years. That didn't last long, as bonds rallied on hopes of a rate cut next week amid the weak data, and stocks did a U-turn, heading higher by midday and never looking back."
"The weak ADP data also drove buyers into the Treasury market, as yields across the entire curve fell. Some bond market mavens feel that the weak data could push the Fed to cut rates not only next week but also follow up with another cut in January. Interest rate Hawks feel that cutting rates too far and too fast could trigger another wave of inflation, which has remained somewhat steady despite significant declines in energy prices."
Weak ADP private payrolls led to an initial equity selloff followed by a bond rally and an equity reversal, leaving stocks higher by the close. The Dow rose 0.96% to 47,928, the S&P 500 gained 0.38% to 6,855, and the NASDAQ added 0.26% to 23,468. The ADP report showed a 32,000 decline in private-sector employment in November, the largest decline in 2½ years, making a 25-basis-point Federal Reserve rate cut next week likely. Treasury yields fell across the curve; the 30-year yield ended at 4.73% and the 10-year at 4.06%. Oil and natural gas rallied on renewed geopolitical risk, with Brent at $62.83, WTI at $59.13, and natural gas at $5.00. Some market participants warn that rapid, deep rate cuts could revive inflation despite recent energy price declines.
Read at 24/7 Wall St.
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