U.S. Stocks May See Initial Weakness, Extending Recent Roller-Coaster

Stocks are likely to come under pressure in early trading on Wednesday, extending the roller-coaster ride seen over the first few trading days of October. The major index futures are currently pointing to a lower open for the markets, with the Dow futures down by 222 points.

Lingering concerns about inflation and the Federal Reserve scaling back stimulus may lead to a pullback on Wall Street following the rebound seen in the previous session.

Traders are also keeping an eye on developments in Washington, where lawmakers currently remain at an impasse over raising the debt ceiling.

Treasury Secretary Janet Yellen has warned the U.S. could face a recession if Congress fails to raise the debt ceiling by October 18th.

“It would be catastrophic to not pay the government’s bills, for us to be in a position where we lacked the resources to pay the government’s bills,” Yellen said in an interview on CNBC. “I fully expect it would cause a recession as well.”

However, the major index futures have regained some ground following the release of a report from payroll processor ADP showing stronger than expected private sector job growth in the month of September.

ADP said private sector employment jumped by 568,000 jobs in September after rising by a downwardly revised 340,000 jobs in August.

Economists had expected private sector employment to climb by 428,000 jobs compared to the addition of 374,000 jobs originally reported for the previous month.

“The labor market recovery continues to make progress despite a marked slowdown from the 748,000 job pace in the second quarter,” said ADP chief economist Nela Richardson.

She added, “Current bottlenecks in hiring should fade as the health conditions tied to the COVID-19 variant continue to improve, setting the stage for solid job gains in the coming months.”

On Friday, the Labor Department is scheduled to release its more closely watched monthly employment report, which includes both public and private sector jobs.

Economists currently expect employment to increase by 488,000 jobs in September after rising by 235,000 jobs in August. The unemployment rate is expected to dip to 5.1 percent from 5.2 percent.

After moving sharply lower on Monday, stocks showed a strong move back to the upside during trading on Tuesday. The major averages all showed strong upward moves on the day.

The major averages pulled back off their highs going into the close but remained firmly positive. The Dow advanced 311.75 points or 0.9 percent to 34,314.67, the Nasdaq surged 178.35 points or 1.3 percent to 14,433.83 and the S&P 500 jumped 45.26 points or 1.1 percent to 4,345.72.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan’s Nikkei 225 Index slumped by 1.1 percent, while Hong Kong’s Hang Seng Index slid by 0.6 percent.

The major European markets have also moved to the downside on the day. While the German DAX Index has tumbled by 1.6 percent, the French CAC 40 Index is down by 1.5 percent and the U.K.’s FTSE 100 Index is down by 1.4 percent.

In commodities trading, crude oil futures are falling $0.71 to $78.22 a barrel after jumping $1.31 to $78.93 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,759.90, down $1 compared to the previous session’s close of $1,760.90. On Tuesday, gold fell $6.70.

On the currency front, the U.S. dollar is trading at 111.36 yen compared to the 111.46 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.1542 compared to yesterday’s $1.1598.

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