US open: Dow rallies over 200 points after solid ADP report

US stocks rallied early on Wednesday, following a better-than-expected private sector employment report, while investors awaited a number of Federal Reserve speakers.

Shortly before 1500 BST, the Dow Jones Industrial Average was up 207 points to 16,256.21, while the S&P 500 and the Nasdaq were 23 and 68 points higher respectively.

The US open followed Asia, where stocks recovered from the previous session’s losses, although they remained on track for one of their worst quarterly performances since the recession while in Europe auto stocks led European equity markets higher.

Oil prices were mixed, with West Texas Intermediate losing 0.02% to $45.22 a barrel, while Brent climbed 0.37% to $48.41 a barrel.

ADP report impresses

The US private sector generated 200,000 jobs in September, marking a slight acceleration from the previous month’s tally, according to private consultancy ADP.

Economists had been expecting a reading of 188,000, while the previous month's tally was revised lower to show a gain of 186,000 compared with a preliminary forecast of 190,000.

"We place limited weight on the ADP employment numbers, given their history of frequent revisions," analysts at Barclays said in a note.

"We look to Friday’s official employment report from the Labor Department as a more reliable indicator of US labor markets. We continue to expect nonfarm payroll growth of 200k and an unchanged unemployment rate of 5.1%."

Meanwhile, according to figures released by MNI Indicators, the Chicago Purchasing Managers’ Index slumped from 54.4 in August to 48.7 in September and below the 50 threshold that indicates expansion.

The figure was comfortably short of analysts’ expectations for a 53.0 reading.

The Mortgage Bankers Association said its seasonally adjusted index of application activity, which covers home purchase demand and refinancing demand, declined 6.7% in the week ended 25 September.

The seasonally adjusted sub-index of refinancing applications tumbled 8%, while the index of loan requests for home purchases, a key indicator of home sales, fell 6% but remained 20% higher year-on-year.

Fed speakers set to polarise attention

A number of Federal Reserve speakers are also scheduled to address market participants, as investors look for clues over the timing of a first interest rates hike by the US central bank.

New York Fed President William Dudley will speak in New York at 1330 BST, while Fed chairwoman Janet Yellen will speak in St Louis at 2000 BST.

Fed governor Lael Brainard will also the stage at the same conference at 0115 BST on Thursday.

However, given Yellen’s preferred timeline for rate hike was stated quite clearly last week her remarks “might not have the same disruptive influence they normally do”, said IG’s senior market analyst Alastair McCaig.

In company news, electric-car maker Tesla Motors slid 1.04% after unveiling its Model X SUV late on Tuesday, while Costco Wholesale gained 0.37% after reporting a 10% increase in fourth quarter profit.

Elsewhere, the dollar was on the back foot against the pound, losing 0.14%, but gained 0.14% and 0.52% against the yen and the euro respectively, while gold futures lost 1.18% to $1,114.18