US open: Stocks struggle for direction after ADP report

US stock indices wavered early on Wednesday, after an upbeat private jobs report and comments from a top Federal Reserve official strengthened the case for a December rate hike, with chair Janet Yellen due to speak later.

Shortly before 1500 GMT, the Dow Jones Industrial Average was down six points to 17,882.61, while the S&P 500 was flat and the Nasdaq was up 13 points.

Investors were listening for indications of the US central bank’s current mood from two Fed speakers on Wednesday, ahead of the 15-16 December meeting.

With Yellen is due to speak at 1725 GMT, Atlanta Fed president Dennis Lockhart said the case for raising interest rates this month was “compelling” adding he expected wage growth to gain momentum in the medium-term future.

"I think the economy is closing in on full employment,” he said in a speech in Fort Lauderdale.

"As we approach that condition, I would expect to see confirming evidence that labour markets have tightened up. Such evidence might come in the form of wage growth.

He noted that the trend in wage growth has been weak for some time, but "may be picking up".

Strong ADP report

On the macroeconomic front, according to ADP, the US private sector created 217,000 jobs in November, exceeding expectations for a 190,000 reading and up from an upwardly revised reading of 182,000 in October.

“This morning’s print is consistent with our outlook for nonfarm payroll growth of 200,000 and a one-tenth decline in the unemployment rate in Friday’s official employment report,” said analysts at Barclays.

Meanwhile, according to the Labor Department, unit-labour costs were revised upward to show a 1.8% quarter-on-quarter in the three months to September, while unit-labour costs rose 2% in the previous three months compared with the 1.8% decline that was initially reported.

As a result, unit-labour costs rose 3% year-on-year, compared with an original estimate for a 2% increase, while growth in productivity was revised upward to show a 2.2% quarter-on-quarter gain in the third quarter, compared with an estimate of a 1.6% gain. On a year-on-year basis, productivity rose 0.6%, slightly higher than the initial 0.4% reading.

In company news, Yahoo jumped 4.33% after reports that the internet giant may sell its core internet business, while Twitter slid 1.18% after co-founder Evan Williams sold shares.

The earnings season continues, with Aeropostale and Box set to report after the close.

Elsewhere, Europe and London equities were on the up, while earlier Asian equity markets had a mixed session, as Chinese stocks gained but failed to generate any momentum across the region, while European stocks gained ground.

The dollar was on the front foot against the main currencies, gaining 0.33% and 0.52% against the euro and the pound respectively and rising 0.36% against the yen, while gold spot slumped 0.96% to 1,058.98.

Oil prices declined, with West Texas Intermediate losing 1.68% to $41.16 a barrel, while Brent lost 1.76% to $43.67 a barrel.