U.S. stocks faced a mixed day on Wall Street after a report from processing firm ADP said hiring suddenly contracted in June, the first decrease in two years.
ADP on Wednesday said private-sector employment shed 33,000 positions during the month, although pay was up 4.4% year over year.
“Though layoffs continue to be rare, a hesitancy to hire and a reluctance to replace departing workers led to job losses last month,” ADP chief economist Nela Richardson said.
The drop missed Wall Street forecasts of a 100,000 increase in jobs.
Major indexes toggled between negative and positive territory as investors tried to digest the unexpected numbers. Until Wednesday, the S&P 500 had been hitting record highs.
Stocks began to rebound from early losses after President Trump said he reached a trade deal with Vietnam.
The ADP report was seen as a warning for the economy, which has proved durable despite doomsday predictions about the White House’s up-and-down trade agenda.
Ultimately, investors are likely to put more stock in a forthcoming government report on nonfarm payrolls in June. That report is projected to show a jobs increase.
Wall Street forecasters are expecting that report, due Thursday before the July 4 holiday, to show a jobs increase of 110,000, so it is unclear if the ADP report will be an accurate predictor of the formal numbers.
“ADP payrolls declined in June for the first time since March 2023. Tomorrow’s nonfarm payrolls report will be more important, but this suggests that the labor market is softening,” Kathy Jones, chief fixed income strategist at the Schwab Center for Financial Research, wrote Wednesday on X.
The ADP report said while goods-producing sectors like manufacturing and construction added jobs, professional and business services lost 56,000 positions and education/health services were down 52,000.
The Midwest saw the biggest drop, at 24,000, while the South was a regional exception and added jobs (13,000).
President Trump is cajoling House Republicans to finish the job and send him major legislation on taxes and spending. He hopes tax cuts and other provisions supercharge the economy alongside his use of tariffs to protect industries.
“Our Country will make a fortune this year, more than any of our competitors, but only if the Big, Beautiful Bill is PASSED!” the president wrote Wednesday on Truth Social.
Mr. Trump is prodding the Federal Reserve, meanwhile, to cut interest rates, saying borrowers deserve better terms because inflation is cooling.
Fed Chairman Jerome Powell said the high level of Mr. Trump’s levies on trading partners forced the central bank to hit pause on rate cuts, given the uncertainty around tariff-induced inflation.
• Tom Howell Jr. can be reached at thowell@washingtontimes.com.