While economists expected private employment to grow by 200,000 jobs in November, up from 239,000 jobs added in the previous month, it increased by 127,000 jobs.
The ADP report comes two days before the Labor Department's Bureau of Labor Statistics' employment report for November on Friday. Although job growth didn't slow as much as expected, it is still gradually slowing, under the impact of the Fed's aggressive rate hikes.
Powell's speech will be closely watched by investors, who are always looking for signs that the Fed will ease its monetary policy.
On the data front, the U.S. Commerce Department has released its second estimate of third-quarter gross domestic product. America's economy expanded at a slightly faster pace than expected at 2.9%, vs a consensus of 2.7%
Fed boss Jerome Powell will take the microphone this afternoon for a much-anticipated speech, two weeks before the last US monetary policy decision. Investors' optimism is being challenged by the multiplication of calls for caution from the central bank. Powell will once again perform a balancing act during which he will have to wield both the carrot and the stick.
Financial markets have built part of their rebound on the belief that the US central bank will bring rates down before the end of next year, once it has triumphed over inflation. Lower rates mean more money in circulation, which means more investment, which means higher risk assets, like stocks. Investors are not listening much to the U.S. central bank, which has been making more and more statements lately about how this scenario is a bit idyllic. Some economists expect Powell to be firm tonight, in a bid to give investors a reality check. That's why Wall Street's tech-laden indexes, the Nasdaq and to a lesser extent the S&P500, have just had three consecutive down sessions.
This slightly more hesitant phase has not improved the image of the bond market among investors. Bloomberg even published a statistic showing that the correlation between stocks and bonds has not been this strong since 2012. In other words, it's complicated to seek diversification or protection in the bond market. This is why the traditional 60/40 portfolio is no longer a dream. In the bond market, the yield curve has reached an extreme inversion, a sign that investors remain convinced that the monetary tightening cycle will end in the relatively near future. In the meantime, the CME's FedWatch tool gives a 67.5% probability of a 50-basis point rate hike on December 14, compared to 32.5% for a 75 basis point increase. A week ago, the proportion was 76%/24%. Somehow, the market has taken note of Fed official's hawkish statements, without reversing its prognosis.
Economic highlights of the day:
On the agenda today, the ADP report on employment, a new estimate of Q3 GDP and wholesale inventories, the Chicago PMI, the JOLTS survey on job openings and sales of old homes, and then Jerome Powell's speech. All the macro agenda is here . Last night, China announced a further deterioration of its PMI indices in November to 46.7 points in services and 48 points for the manufacturing share. As for Japanese industrial production, it disappointed with a contraction of 2.6% in October.
The dollar is up 0.5% to EUR 0.9631 and is down 0.5% to GBP 0.8324. The ounce of gold is still stagnating around 1758 dollars. Oil is rising, with North Sea Brent crude at USD 87.10 per barrel and U.S. WTI light crude at USD 80.8. The yield on 10-year US debt is fluctuating around 3.73%. Bitcoin is trading around USD 16,800.
In corporate news:
* Apple is up 0.6% in premarket trading on the back of a resumption of activities at Foxconn's Zhengzhou, China, site where some of the iPhone products are produced.
* Tesla gained 1% in premarket trading in response to data released by China Merchants Bank International that showed the U.S. automaker's sales nearly doubled in China in November year-over-year as Model 3 and Model Y prices fell.
* Boeing gained about 1% in premarket trading as the aircraft manufacturer received support from U.S. Senate Commerce Committee Chairwoman Maria Cantwell on its request for an extension of certification for two models of its 737 MAX aircraft.
* Hewlett Packard Enterprise is up 1.7% in premarket trading after reporting better-than-expected quarterly sales and announcing that it expects to post better-than-expected revenue in the current quarter.
* Intuit fell 1.1% in after-hours trading after the accounting software company said it expects fiscal 2023 revenue to be below Wall Street expectations.
* Biogen is up 4.0% in pre-market trading after positive results from a clinical trial of its experimental treatment for Alzheimer's disease, developed in collaboration with Japan's Eisai Group.
* Horizon Therapeutics jumped 31% in after-hours trading after announcing preliminary discussions with Amgen, Sanofi and Janssen Global Services to acquire the company.
* NetApp plunges 10.8% in pre-market trading as the cloud computing group expects fiscal third-quarter revenue of between $1.53 billion and $1.68 billion versus the Refinitiv consensus of $1.71 billion.
* Workday is up 6.1% in after-hours trading after reporting adjusted third-quarter earnings that beat analysts' expectations and announcing a new $500 million share buyback plan.