NFP Preview: Weak ADP Data vs. S&P 500 at Fresh Highs

Market Overview

On the eve of todays pivotal Nonfarm Payrolls release, the U.S. labor market showed fresh signs of cooling. ADP private payroll growth slowed sharply, while initial jobless claims came in above expectations—two indicators reinforcing the case for Fed rate cuts. Markets embraced a “bad news is good news” narrative. The S&P 500 hit another record high, and small-cap stocks outperformed with a 1.26% gain. Treasury yields fell across the curve, with the 10-year yield down 5.6 basis points. Meanwhile, some recently strong assets saw profit-taking: gold snapped a seven-day winning streak, dropping more than 1.4% intraday from its session high; WTI crude slid below $64 amid persistent chatter of potential OPEC+ output hikes; and Ethereum underperformed Bitcoin, falling about 4%.

Hot Topics Ahead

● Employment Data Fuels Rate-Cut Bets

U.S. August ADP private payrolls rose by just 54,000, well below the 68,000 consensus and sharply lower than Julys upwardly revised 104,000. The report aligns with other signs of a softening labor market, including fewer job openings and slowing wage growth. Following the release, futures pricing implied a 97% probability of Fed rate cuts.

● ISM Services PMI Expands at Fastest Pace in Six Months

The ISM services PMI rose to 52 in August, beating expectations of 51 and up from Julys 50.1. Growth was driven by the strongest increase in new orders in nearly a year. The employment index was nearly flat at 46.5—still in contraction for a third straight month and among the weakest readings since the pandemic. The prices index eased but remained the second-highest since late 2022, underscoring tariff-related cost pressures.

Key Data to Watch

20:30 (GMT+8) – U.S. August Unemployment Rate; Nonfarm Payrolls (thousands, seasonally adjusted); Average Hourly Earnings (YoY/MoM)

22:00 (GMT+8) – U.S. Global Supply Chain Pressure Index