US open: Stocks fall as investors shrug off upbeat private payrolls data

US stocks fell on Wednesday as investors shrugged off better-than-expected private payrolls data and looked ahead to the more important non-farm payrolls report.

The Dow Jones Industrial Average shed 0.27% to 18,409.44 points, the S&P 500 dropped 0.26% to 2,170.49 and the Nasdaq slipped 0.20% to 5,212.59 points at 1530 BST.

At the same time oil prices fell as data showed weekly crude inventories rose more than expected, with West Texas Intermediate crude down 0.91% to $45.93 per barrel and Brent down 1.17% to $47.81 per barrel at 1536 BST. The Energy Information Administration said crude inventories increased by 2.3m barrels last week to 525.9m, more than the forecast for a 1.3m gain.

US private employers added 177,000 jobs in August, more than the 175,000 expected by analysts, the ADP revealed. July was revised to194,000 jobs from a previous estimate of 179,000.

The report comes ahead of the US Labor Department’s non-farm payrolls report, which will be closely scrutinised after Federal Reserve chair Janet Yellen said the next interest rate hike depends on the strength of incoming data.

“The afternoon’s main piece of data, the ADP non-farm employment change figure, failed to provide investors with much guidance for either Friday’s government-released number or the likely timeline of a Fed rate hike,” said Connor Campbell, financial analyst at Spreadex.

“Coming in at 177k the reading was a tad higher than the 174k expected, but a fair bit lower than the upward-revised 194k from last month. As shown by that revision it is difficult to use the ADP figure as an accurate gauge for the actual non-farm jobs report, with it usually failing to pre-emptively reflect the kind of swings seen in the Friday-favourite. “

Boston Fed President Eric Rosengren said on Wednesday at an event in China that the central bank was close to achieving its employment and inflation target, hinting that policy tightening is on the horizon.

In contrast, Chicago Fed President Charles Evans suggested he was in no rush to tighten policy while speaking at the same event.

Meanwhile, US pending home sales rose more than expected in July, but June’s figure was revised down, according to data from the National Association of Realtors (NAR).

The NAR’s monthly index increased 1.3% to 111.3 in July from a downwardly-revised 109.9 in June, beating expectations for a 0.7% jump. The index is now at its second-highest level this year after April’s 115.0.

Separately, data showed economic activity in the Chicago area deteriorated more than expected in August.

The Chicago Purchasing Managers’ index fell to 51.5 from 55.8 in July, led by a large setback in order backlogs and a deceleration in new orders. Economists had been expecting a smaller decline to 54.0.

On the company front, Palo Alto Networks Inc. shares fell after the cybersecurity firm late Tuesday issued a downbeat outlook on the current quarter.

AeroVironment Inc. slumped after the drone maker reported a 23% drop in quarterly revenue.

H&R Block was under the cosh as it posted quarterly results that missed analysts’ estimates.