US pre-open: Futures trade higher ahead of ADP jobs report

Wall Street futures were in the green ahead of the bell on Wednesday as market participants looked ahead to employment statistics from payrolls firm Automatic Data Processing.

As of 1225 BST, Dow Jones futures were up 0.12%, while S&P 500 and Nasdaq-100 futures had the indices opening 0.20% and 0.41% firmer, respectively.

The Dow closed 140.26 points higher on Tuesday, reversing losses recorded in the previous session.

Trade Nation's David Morrison said: "Yesterday saw another swingy session for US stock indices. All the majors began the day on the backfoot, but subsequently recovered their poise to end near their highs. They were all a touch firmer this morning, with the S&P 500 back above 5,300 in early trade. That places the index within 50 points, or 1%, of its record intra-day high from a fortnight ago. Could the last couple of weeks of pull-back and consolidation have provided the reset required ahead of a rally to take stock indices to fresh record highs? Maybe. But stock market volatility, as measured by the VIX, has also picked up a touch over the last fortnight. One interpretation is that it’s getting back to more normal levels after falling to lows last seen in 2018. Another is that May’s decline was a final downside blow-off ahead of a more protracted rally as the US stock market becomes a riskier place to invest. Perhaps we’ll get more clarity as the month progresses. Certainly, there’s plenty in June to influence market behaviour, with this week’s emphasis on the US employment outlook."

On the macro front for Wednesday, mortgage applications sank by 5.2% in the last week of May, according to the Mortgage Bankers Association, extending the three-month high decline of 5.7% from the previous week. The slump was principally due to ongoing concerns that mortgage rates could remain elevated for a prolonged time, with data from the survey showing that average rates remained above the 7% threshold for nearly two months. Applications to refinance a mortgage fell by 7%, while applications for the purchase of a new home fell by 4%.

Still to come, last month's ADP employment change figures will be published at 1315 BST, while S&P Global's May composite and services PMIs will be out at 1445 BST, and May's ISM services PMI will follow at 1500 BST.

Swissquote's Ipek Ozkardeskaya said: "Today, the ADP report is expected to print around 173,000 new private job additions to the US economy last month. That's a soft but not a disastrous figure. If the ADP report comes in line with expectations or softer-than-expected, we may see the Fed doves gain more traction and the US yields ease more. Equities, on the other hand, will likely react positively to a figure that doesn’t look too soft, as a significant negative surprise on the jobs front could fuel recession worries and prevent equity investors from fully benefiting from potentially rising dovish Fed expectations."

After today's data points, attention will turn to weekly jobless claims numbers from the Labor Department on Thursday and Friday's all-important May jobs report.

In the corporate space, Hewlett Packard was up double-digits after surpassing Wall Street expectations on both the top and bottom lines, while cybersecurity firm CrowdStrike traded higher after reporting better-than-expected earnings and issuing strong guidance.

Discount retailer Dollar Tree and sportswear maker Lululemon were both slated to report earnings on Wednesday.

Reporting by Iain Gilbert at Sharecast.com