Stock Market Today: Dow Droops on Jobs Miss, Interest-Rate Uncertainty

The market closed mixed Wednesday as investors received conflicting signals on the path for interest rates and absorbed a disappointing employment report.

Federal Reserve Vice Chairman Richard Clarida said Wednesday he believes the U.S. should be in a healthy enough position that the central bank could start raising interest rates by 2023.

But ADP's jobs report for July revealed job growth of just 330,000 positions, well below estimates for 653,000 and less than half the 680,000 new jobs created in June. The report added even more uncertainty heading into the upcoming non-farm payrolls report from the Bureau of Labor Statistics.

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"During last week's Federal Open Market Committee meeting press conference, Chair Powell emphasized that the labor market "has a ways to go" before achieving the Fed's maximum employment goal," says Mark Heppenstall, chief investment officer at Penn Mutual Asset Management. "The general consensus for Friday's July employment report puts estimates at nearly 900,000 new jobs, but the forecasts range widely from 350,000 to 1.2 million, as pandemic-related factors continue to raise uncertainties about the supply of labor."

"That outlook [for 900,000 jobs] looks likely to be too optimistic," adds Brad McMillan, chief investment officer for Commonwealth Financial Network. "The major reason is the sudden resurgence of the pandemic, with the Delta variant taking case growth to five times the level at the end of June. The ADP employment report, which came out this morning, suggests that job growth may have slowed significantly in response to that medical news."

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Relative strength in telecommunications stocks such as Facebook (FB, +2.2%), and tech stocks such as Advanced Micro Devices (AMD, +5.5%), helped keep the Nasdaq Composite (+0.1% to 14,780) aloft. However, the S&P 500 (-0.5% to 4,402) and Dow Jones Industrial Average (-0.9% to 34,792) finished in the red. Energy (-2.9%) and industrials (-1.4%) were Wednesday's biggest sector laggards.

Other news in the stock market today:

• The small-cap Russell 2000 was hit for a 1.2% loss to 2,196.
• General Motors (GM) shed 8.9% after the automaker reported lower-than-expected adjusted earnings per share (EPS) of $1.97, citing higher warranty recall costs. However, GM beat on the top line, bringing in $34.2 billion, and the company raised its full-year adjusted EPS guidance to $5.40 to $6.40 per share.
• Kraft Heinz (KHC, -5.1%) stock was another post-earnings loser. The food products specialist reported higher-than-anticipated adjusted earnings of 78 cents per share and revenue of $6.6 billion. However, organic net sales and sales volume were lower on a year-over-year basis.
• U.S. crude oil futures plunged 3.4% to end at $68.15 per barrel after data from the Energy Information Administration showed an unexpected rise in domestic crude inventories. It was black gold's third straight down day.
• Gold futures posted a marginal gain to end at $1,814.50 an ounce.
• The CBOE Volatility Index (VIX) edged 0.2% higher to 18.08.
• Bitcoin rebounded by 4.7% to $37,989.75. $39,758.78. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m. each trading day.)

When You Diversify, Don't Forget to Look at a Map

Wall Street experts have been sounding the same alarm all summer, believing volatility is right around the bend. We've been underscoring the importance of diversification as a way to brace for a bout of volatility, too.

In some cases, that means rethinking your sector exposure, adding defensive-minded stocks or finding room in your portfolio for a little income production. But don't forget about that other way of adding diversification to your portfolio: by broadening your geographic horizons.

European stocks, for example, often trade at more attractive valuations than their U.S. counterparts. And that happens to be just such the case right now – Europe simply looks like a bargain. Fortunately, you don't have to wander blindly into the eurozone wilderness. The European Dividend Aristocrats are chock full of well-heeled, dividend-growing multinational companies, many of which you might be familiar with.

If you're looking to diversify with a bigger emphasis on growth, you might want to focus on emerging markets (EMs) – but given the less-stable nature of these developing countries, it typically makes sense to "bundle" your purchases through funds such as these 10 emerging market ETFs.

Whether it's a difference in strategy or simply more targeted exposure to varying parts of the globe, these 10 funds provide a wide range of ways to invest in high-growth EMs.