US open: Stocks fall as private payrolls report misses estimates

US stocks fell on Wednesday after a report showed the nation’s private sector added fewer jobs than expected in April.

The Dow Jones Industrial Average fell 0.25%, the S&P 500 dropped 0.40% and the Nasdaq slid 0.45% at 1540 BST.

According to private consultancy ADP, US employers added 156,000 jobs in April, compared with a downwardly-revised 194,000 in March and much weaker than expectations of 196,000.

The construction industry added 14,000 jobs, down from March’s 18,000, while manufacturing lost 13,000 jobs after being revised down to a 3,000 drop the previous month.

Mark Zandi, chief economist of Moody’s Analytics, said: “The job market appears to have stumbled in April. Job growth noticeably slowed, with some weakness across most sectors. One month does not make a trend, but this bears close watching as the financial market turmoil earlier in the year may have done some damage to business hiring.”

The data comes ahead of Friday’s all-important non-farm payrolls report, which is expected to show employers added 200,000 jobs in April compared to 215,000 the previous month.

Meanwhile, new orders for US factory goods rose more than expected in March, the Commerce Department said. New orders for manufactured goods increased 1.1%after February's downwardly revised 1.9% fall, beating estimates for a 0.6% gain.

Markit’s final US business services purchasing managers’ index printed at 52.8 in April, up from 51.3 in March and ahead of consensus estimates for a reading of 52.1. A level above 50 signals an expansion in the sector while a reading below that indicates a contraction.

The latest reading was the highest since January and signalled a moderate expansion of service sector business activity.

Other data showed the US trade deficit hit its lowest level in 16 months in March as imports fell the most in seven years. The trade deficit narrowed by $6.5bn to $40.4bn, marking the smallest gap since November 2014 and a little better than economists’ expectations for a deficit of $41.2bn. March exports came in at $176.6bn, down $1.5bn from February, while imports were down $8.1bn from February at $217.1bn.

"The narrowing in the monthly deficit was driven by a massive 3.6% m/m drop back in imports, which itself was in largely due to a massive 9.9% m/m decline in consumer goods imports," Capital Economics said.

"Before we start panicking about a collapse in US domestic demand, however, it’s worth noting that the slump in March followed an equally suspicious looking 7.4% m/m surge in consumer goods imports in February."

Separately, US government data revealed commercial crude stockpiles rose by 2.8 million barrels last week to a total of 543.4 million barrels, more than the increase of 1.7 million barrels expected.

At 1553 BST West Texas Intermediate crude rose 1.5% to $44.35 per barrel and Brent crude increased 0.99% to $45.42 per barrel.

In company news, Time Warner’s shares advanced after the company reported an increase in first quarter earnings that surpassed analysts’ estimates, boosted by HBO revenues.

Priceline plunged as the travel company warned investors its profit growth would slow sharply in the second quarter despite reporting strong first quarter revenue and profit gains.

Zillow gained after raising its full-year revenue outlook late on Tuesday.

21st Century Fox and Kraft Heinz are due to report earnings after the market closes.