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Stock futures trade just below the flatline on Wednesday morning as the U.S. economy saw another robust month of private-sector growth in August.
S&P 500 futures were down 0.04%, Dow Jones Industrial Average futures decreased 0.05%, and Nasdaq futures declined 0.03%.
The U.S. economy added 177,000 jobs to private payrolls over the past month, according to the ADP Employment Report. Economists had expected 175,000 jobs to have been added. July's private payrolls were revised up to 194,000 from 179,000.
The official jobs report for August, the most closely watched release of the month, will be out on Friday. Economists expect the pace of jobs growth in August to slow after blockbuster readings in June and July. Analysts at TD Securities expect 189,000 jobs to have been added to the U.S. economy, while the unemployment rate will dip to 4.8%. The U.S. economy added 255,000 jobs in July.
Federal Reserve talk continued to spark speculation over a near-term rate hike. Slower U.S. economic growth will likely continue, leading to a prolonged period of low interest rates for the foreseeable futures, Chicago Federal Reserve Bank President Charles Evans said in comments to the Shanghai Advanced Institute of Finance in Beijing. Evans also noted that low expectations among investors has become entrenched, allowing the Fed to delay a hike without financial instability.
"Long-run expectations for policy rates provide an anchor to long-run interest rates," Evans said in his prepared remarks. "So, lower policy rate expectations act as a restraint on how much long-term rates could rise following a surprise over the near-term policy path."
Evans' comments add to the differing views over the Fed's likely rate-hike timeline. Fed Vice Chairman Stanley Fischer added to the discussion on Tuesday, noting that the U.S. labor market is "very close to full employment" and that the next interest rate increase might not be "one and done."
Wall Street currently expects a more than 30% chance that the Fed will raise rates at its Sept. 20-21 meeting. The chances of a September hike were less than 20% before hawkish comments from Fed Chair Janet Yellen on Friday. The U.S. economy has improved in recent months to the point where near-crises levels of rates aren't justified, Yellen said in her widely anticipated speech at the Economic Policy Symposium in Jackson Hole, Wyo. on last week.
Tax preparer H&R Block (HRB) - Get Report fell 5% after reporting a wider-than-expected loss over its recent quarter. The company reported a per-share loss of 55 cents, wider than 35 cents a year earlier and missing estimates of a loss of 53 cents. Revenue fell 9.1%. H&R cited fewer U.S. customers as reason for the weaker performance.
Palo Alto Networks (PANW) - Get Report slid 6% in premarket trading after issuing a mixed outlook for the current quarter and full year. The cybersecurity company anticipates per-share earnings of 51 cents to 53 cents in its October-ending quarter, below estimates of 56 cents. Its full-year outlook appears more positive with guidance of $2.75 to $2.80 a share beating forecasts of $2.64.