[New York Stock Market] Dow down 0.14% · Nasdaq up 0.33% mixed... Nasdaq hits all-time high

Weak Employment Indicators Combined with Liquidity Growth Expectations
Tech-Focused Nasdaq Hits All-Time High

[Image source=AP Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] The New York stock market initially fell due to concerns over economic deterioration after private employment data came in significantly below expectations. However, the market partially recovered losses amid analyses suggesting that the Federal Reserve's asset purchase tapering might be delayed, resulting in a mixed trend. The Nasdaq, led by technology stocks, rose sharply to reach an all-time high.

On the 1st (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 35,312.53, down 48.20 points (0.14%) from the previous session. The S&P 500 index rose 1.41 points (0.03%) to 4,524.09, while the technology-heavy Nasdaq Composite Index closed at 15,309.38, up 50.15 points (0.33%).

The New York stock market started lower after the release of August private employment figures, which fell far short of expectations. According to the ADP National Employment Report, private sector employment increased by 374,000 in August compared to the previous month, significantly below the market forecast of 600,000. The July figure was also revised downward from an increase of 330,000 to 326,000.

ADP employment data, released ahead of the Labor Department's employment report, serves as an indicator of private sector nonfarm employment trends and is compiled based on actual payroll data. Concerns arose that the Labor Department's employment report, scheduled for release on the 3rd, would also reflect a sluggish employment situation.

Nela Richardson, Chief Economist at the ADP Research Institute, stated, "Despite a recession, nearly 4 million jobs have been added this year, but there are still 7 million fewer jobs than pre-pandemic levels." The spread of the COVID-19 Delta variant is believed to have slowed the recovery of the labor market.

However, due to the weak employment data, analyses emerged suggesting that the Fed's tapering might be delayed. Particularly, the Nasdaq, led by technology stocks, rebounded from early losses to reach an all-time high. Earlier, the market had anticipated that tapering might be announced at the Federal Open Market Committee (FOMC) regular meeting in September, but the significantly weak employment situation has raised expectations for a delay.

The Wall Street Journal (WSJ) compiled economists' forecasts for August nonfarm payrolls at 720,000, down from the record 943,000 in the previous month. If the employment slowdown in August is greater than expected amid the spread of the Delta variant, it is highly likely that the Fed will postpone its tapering policy.

Other major economic indicators also showed somewhat weak performances. The final seasonally adjusted Manufacturing Purchasing Managers' Index (PMI) for August, released by IHS Markit, was 61.1, down from 63.4 in July. The Institute for Supply Management (ISM) reported an August Manufacturing PMI of 59.9, exceeding the expert forecast of 58.6 and July's 59.5, but the trend of gradual slowdown since March continued. The 10-year Treasury yield fluctuated around 1.30% amid the weak indicators.

Experts forecast that since the stock market had risen significantly through August this year, it may face correction pressures starting in September. Ryan Detrick, market analyst at LPL Financial, told CNBC, "The bull market has shrugged off all worries this year, but we must not forget that September has historically been the worst month for the stock market." He added, "Even last year, after the 2020 stock prices hit their low, there was a significant rally, but in mid-September, there was about a 10% correction."

This content was produced with the assistance of AI translation services.