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Stocks End Mostly Lower on Private-Sector Jobs Miss, Hints of Higher Rates

Stocks finish mostly lower after private employers in the U.S. added fewer-than-expected jobs in July.

Stocks finished mostly lower Wednesday after private employers in the U.S. added fewer-than-expected jobs in July, suggesting an uneven recovery as pandemic concerns and supply-chain disruptions hold back employment gains.

Equities also tumbled following comments from Federal Reserve Vice Chairman Richard Clarida, who said the central bank could begin boosting interest rates early in 2023 as long as the economy continues to expand.

The Dow Jones Industrial Average finished down 323 points, or 0.92%, to 34,792, and the S&P 500 declined 0.46%. The Nasdaq ended up 0.13%. 

Stocks finished higher Tuesday with the S&P 500 closing at a record.

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Payroll-processing company ADP said private-sector jobs last month rose only 330,000, the smallest gain since February and less than half economists' forecasts of 695,000. 

“The labor market recovery continues to exhibit uneven progress, but progress nonetheless. July payroll data reports a marked slowdown from the second-quarter pace in jobs growth,” said ADP's chief economist, Nela Richardson. 

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“For the fifth straight month the leisure and hospitality sector is the fastest growing industry, though gains have softened. The slowdown in the recovery has also impacted companies of all sizes."

Richardson added that "bottlenecks in hiring" were holding back stronger employment gains, and she noted fresh COVID-19 concerns. She expects that the "barriers should ebb in coming months, with stronger monthly gains ahead as a result."

The ADP report served as a precursor to the Friday release of the official U.S. jobs report for July. Economists surveyed by FactSet estimate that the U.S. added 850,00 jobs last month, about flat with June.

Wall Street also was monitoring mixed corporate earnings reports and the spread of the delta variant of COVID-19 across the globe.

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Earnings season has been strong with about 87% of S&P 500 companies reporting earnings and revenue beats, according to FactSet. Just under 70% of the S&P 500 now has reported earnings.

General Motors  (GM) - Get General Motors Company (GM) Report declined 8.9% on Wednesday after the automaker posted weaker-than-expected second-quarter earnings but lifted its full-year profit guidance.