Wall Street set to open flat as investors parse jobs data

July 7, 2016 08:30 AM

Wall Street was set to open little changed on Thursday as early premarket losses were pared back after strong private sector employment data pointed to a steadying labor market ahead of the monthly payrolls report on Friday. 

The ADP national employment report showed that 172,000 jobs were added in the private sector in June, compared to economists' expectation of 159,000.

The number of Americans filing for unemployment benefits unexpectedly fell last week, confirming that the labor market remains on solid footing despite tepid job gains in May. 

Claims fell to 254,000 in the week ended July 2, compared with expectations of 270,000.

After a roller-coaster ride sparked by Britain's June 23 vote to leave the European Union, investors in the United States are looking for signs of the health of the economy and the possible impact of the vote on quarterly earnings. 

Investors will keenly watch for the June payrolls report on Friday, especially after a shockingly weak May report raised concerns about the recovery of the U.S. economy and threw the Fed off track from its plans to raise rates in the near term. 

U.S. economic data in the past weeks, including manufacturing and services data, have been mixed.

While the cautious Fed is not expected to raise interest rates anytime soon, strong economic data will give the central banks reasons for its next move when it meets on July 26-27. 

"Today the markets will be looking at how the ADP numbers will spell out for tomorrow's data," said John Brady, senior vice president at R.J. O’Brien & Associates in Chicago. "The ADP numbers were pretty strong last month, but the following jobs report did not confirm that." 

Dow e-minis  were down 16 points, or 0.09% at 8:16 a.m. ET (1216 GMT), with 21,915 contracts changing hands.

S&P 500 e-minis  were down 2 points, or 0.1%, with 187,705 contracts traded.

Nasdaq 100 e-minis were down 2.25 points, or 0.05%, on volume of 21,485 contracts.

Investors are also getting ready for second-quarter earnings, which are expected to fall 3.9 percent from a year earlier, according to Thomson Reuters data. First-quarter earnings had fallen 5 percent. 

Oil prices rose for the second straight day as U.S. crude oil inventories fell and the dollar weakened. 

However, the rally in gold prices continued and U.S. Treasury bond yields were still under pressure indicating a weak appetite for risk. 

Wall Street closed higher on Wednesday as investors cheered the Fed's comments which indicated that it would not raise rates soon and strong U.S. data pointed at some economic improvement amid global glum. 

PepsiCo's shares rose 1.9% to $108.20 in premarket trading, after the company reported a second-quarter profit that beat analysts' estimate.

Whitewave Foods  jumped 19% to $56.45 after Danone said it would buy the organic food maker for $12.5 billion, including debt.

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