Lackluster jobs data pushes markets down

Stocks gave back some of their recent gains Wednesday after a disappointing jobs report stoked worry about the strength of the economic recovery as a highly contagious variant of the coronavirus spreads.

The S&P 500 fell 0.5%, easing back from the all-time high the benchmark index set a day earlier. Crude oil prices fell more than 3% and pushed energy companies lower. Industrial firms, banks, retailers, hotels and other companies that rely on direct consumer spending also fell. Those losses outweighed gains in technology and communication stocks.

Payroll processor ADP revealed a disappointing snapshot of the nation’s employment recovery, adding to concerns about the lagging recovery in the jobs market. ADP said the private sector added 330,000 jobs in July, falling far short of economists’ expectations. The report comes ahead of the Labor Department’s more comprehensive July jobs report on Friday.

“You’re getting some mixed signals, certainly, but we think we’ll get some good growth and the underlying economy is pretty good,” said Scott Wren, senior global market strategist at Wells Fargo Investment Institute.

The recovery in the jobs market will likely continue to be bumpy, but it’s on track to continue improving over the long term, he said.

The S&P 500 fell 20.49 points to 4,402.66. The Dow Jones Industrial Average dropped 323.73 points, or 0.9%, to 34,792.67. The Nasdaq composite added 19.24 points, or 0.1%, to 14,780.53. The Dow and Nasdaq each hit all-time highs just last week.

Stocks have been choppy this week as investors continue to pore over corporate earnings reports while reviewing economic data for clues as to how the economic recovery is going.

Wednesday’s jobs survey from ADP raised doubts that Friday’s broader July jobs report will exceed expectations. Economists are projecting that U.S. employers added 700,000 jobs last month, and that the national unemployment rate slipped to 5.7% from 5.9%, according to FactSet.

That outlook is now likely too optimistic, because of the sudden resurgence in COVID-19 cases due to the delta variant, Brad McMillan, chief investment officer for Commonwealth Financial Network, wrote Wednesday.

Bond yields mostly recovered from an early slip following the release of the report. The yield on the 10-year Treasury dropped to 1.16%, down from 1.17% late Tuesday.