Stocks wavered throughout Wednesday's session after a stronger-than-expected reading on hiring countered other employment data that suggested cooling in the labor market. Rising tensions in the Middle East and the looming nonfarm payrolls report also weighed on gains for equities.
The jobs market – and its implications for the pace of cuts to interest rates – was the main driver of the session after news dropped that private payrolls expanded at a healthy clip last month.
Private employers added 143,000 jobs in September, according to the ADP National Employment Report. "Job creation showed a widespread rebound after a five-month slowdown," ADP said in a statement. The manufacturing sector added jobs for the first time since April, the firm added, while only the information technology sector saw job losses last month.
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"So far, this week's labor market data has been more resilient than many analysts had expected," wrote Chris Larkin, managing director of trading and investing at E*Trade. "Like yesterday's job openings total, today's ADP employment number surprised to the upside, suggesting the labor market is bending but not breaking. But Friday's monthly jobs report will have the final word on the current jobs picture, and more than likely, on near-term market sentiment."
A slowing labor market prompted the Federal Reserve to enact a jumbo-sized rate cut last month, and market participants are trying to forecast the pace of future reductions to borrowing costs. As of October 2, futures traders assigned a 65% chance to the central bank cutting the short-term federal funds rate by a quarter of a percentage point at the next Fed meeting, according to CME Group's FedWatch Tool, up from 43% a week ago. Odds of a second half-point cut stood at 35%, down from 57% last week.
"This morning's ADP employment report adds credence to the argument that economic and labor conditions remain sturdy, especially following yesterday's upside beat on job openings," wrote José Torres, senior economist at Interactive Brokers. "Of course, tomorrow's read on unemployment claims and ISM services will provide further details, but the main event occurs on Payroll Jobs Friday."
At the closing bell, the blue chip Dow Jones Industrial Average was up less than a tenth of a percent at 42,196, while the broader S&P 500 was essentially unchanged at 5,709. The tech-heavy Nasdaq Composite added less than a tenth of a percent to 17,925.
Stocks on the move
Lamb Weston (LW) stock rose 2.6% after the potato producer beat top- and bottom-line expectations for its fiscal first quarter, announced a restructuring plan and lowered its full-year profit forecast.
"Restaurant traffic and frozen potato demand, relative to supply, continue to be soft, and we believe it will remain soft through the remainder of fiscal 2025," Lamb Weston CEO Tom Werner said in a statement.
As a result of the restructuring plan, Lamb Weston now anticipates earnings per share in the range of $4.15 to $4.35, which is down from its previous forecast of $4.35 to $4.85. However, it continues to expect that revenue will range between $6.6 billion to $6.8 billion.
Humana (HUM) stock plunged 11.8% after the health benefits company announced preliminary 2025 Medicare Advantage Star Ratings data for its plans, which included a significant reduction in members enrolled in plans with ratings of four stars and above.
Humana said in a regulatory filing Wednesday that approximately 1.6 million, or 25%, of its members are currently enrolled in MA plans that are rated as four stars and above for 2025, which is down from 94% in 2024.
"The decline in Stars performance for 2025 will impact Humana's quality bonus payments in 2026," Humana said in the filing. "The 2025 Star rating details are expected to be formally released by CMS on or around October 10th."
Nike calls a time out
Nike (NKE) was the worst performer among all 30 Dow Jones stocks today, falling 6.8% after the athletic apparel and footwear retailer reported mixed results for its fiscal first quarter.
Making matters worse, the blue chip withdrew its full-year guidance and postponed its investor day.
The company disclosed last month that Elliott Hill would become president and chief executive of Nike as of October 14, replacing current CEO John Donahoe. Hill spent 32 years at Nike in various roles before retiring in 2020 as president of its consumer and marketplace division.
"Given our CEO transition and with three quarters left in the fiscal year, we are withdrawing our full-year guidance," Chief Financial Officer Matthew Friend said in a statement. "This provides Elliott with the flexibility to reconnect with our employees and teams, evaluate the current strategies and business trends, and develop our plans to best position the business for fiscal 2026 and beyond."
Wednesday's drawdown erased roughly $9 billion in market cap and Nike stock is now off 23% for the year to date. That lags the broader market by more than 40 percentage points. As disappointing as 2024 has been, Wall Street sees brighter days ahead. The company's brand leadership and the stock's depressed valuation are just two factors contributing to analysts being largely bullish on Nike.
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