Stocks were choppy Wednesday as market participants weighed weak economic data and tumbling Treasury yields.
Ahead of the opening bell, data from ADP showed private employers added 37,000 jobs in May. This was the lowest reading since March 2023 and well short of the 110,000 economists expected.
"After a strong start to the year, hiring is losing momentum," said Nela Richardson, chief economist at ADP. "Pay growth, however, was little changed in May, holding at robust levels for both job-stayers and job-changers."
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The data hit ahead of the next government jobs report, due out Friday morning, which is expected to show the U.S. added 125,000 nonfarm payrolls in April.
Job growth has been a tailwind for the U.S. economy, says Scott Helfstein, head of investment at Global X, and this makes Friday's report "particularly important in the battle of hard fundamental data versus high frequency survey data."
Trump takes aim at Powell
And another weak reading on the labor market could direct more of President Donald Trump's ire toward Federal Reserve Chair Jerome Powell.
After this morning's low ADP reading, Trump took to Truth Social to write, "ADP NUMBER OUT!!! 'Too Late' Powell must now LOWER THE RATE."
Futures traders remain unfazed. According to CME Group's FedWatch, odds are highest that the next quarter-point rate cut will come at the central bank's September meeting.
The services sector contracts
Elsewhere, the Institute for Supply Management (ISM) said its Services Purchasing Managers Index (PMI) unexpectedly fell to 49.9% from 51.6% in April.
This marks the first contraction – as indicated by a drop below the key 50 level – in services sector activity since June 2024.
"May's PMI level is not indicative of a severe contraction, but rather uncertainty that is being expressed broadly among ISM Services Business Survey panelists," says Steve Miller, chair of the ISM Services Business Survey Committee.
Miller adds that the average reading of 50.8% in the past three months still signals expansion over that time frame, but notes that it is a significant downshift from its average of 52.8% in the past nine months.
The disappointing economic data sent Treasury yields tumbling on Wednesday. The yield on the 2-year note ended the day down 9.1 basis points to 3.866%. The yield on the 10-year note slid 10.5 basis points to 4.355% – its biggest one-day decline since April 14.
As for the main indexes, the S&P 500 ended fractionally higher at 5,970 and the Nasdaq Composite gained 0.3% to 19,460. The Dow Jones Industrial Average slipped 0.2% to 42,427 on weakness in Chevron (CVX, -1.5%) and Travelers Companies (TRV, -1.5%).
CrowdStrike's impressive run stalls after earnings
In single-stock news, CrowdStrike Holdings (CRWD) plunged 5.8% after the cybersecurity firm swung to a fiscal first-quarter loss of $110.2 million from a profit of $42.8 million in the year-ago period.
The loss is a result of continued costs related to last summer's widespread software outage. Stripping out one-time expenses, CrowdStrike disclosed adjusted earnings of $184.7 million, or 73 cents per share.
This was more than the 66 cents per share that analysts expected, but revenue of $1.10 billion fell short. The company also forecast lower-than-anticipated revenue for its fiscal second quarter.
BofA Securities analyst Tal Liani downgraded the tech stock to Neutral (Hold) from Buy after earnings. "We favor CrowdStrike's fundamentals and growth prospects, but believe the valuation leaves only limited upside," he says.
CRWD has been impressive on the price charts over the past 12 months, generating a nearly 50% return vs the S&P 500's 13% gain.
Red-hot Constellation Energy gets downgraded
Constellation Energy (CEG) fell 4.3% after Citi Research analyst Ryan Levine cut his rating on the utility stock to Hold from Buy. Levine also lifted his price target on CEG to $318 from $232, representing implied upside of just 6% to Wednesday's close.
The analyst note comes one day after Constellation Energy said it signed a 20-year deal with Meta Platforms (META) that will provide the Facebook parent with nuclear energy.
Levine says that the excitement surrounding Constellation's deals with several hyperscalers, including Meta and Microsoft (MSFT), is already priced into the stock.
Indeed, shares are up 44% year over year. And Levine believes "there is a balanced risk to the upside and the downside."
He also thinks CEG is a "high risk" because of its exposure to other commodities, including gas, uranium and oil prices, which he says "are inherently volatile and difficult to predict."
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