US pre-open: Stocks seen lower ahead of ADP employment report
US futures pointed to a lower open on Wall Street on Wednesday, with tech stocks likely to drag on the Nasdaq again as investors eyed the latest ADP employment report.
At 1230 GMT, Dow Jones Industrial Average and S&P 500 futures were down 0.2%, while Nasdaq futures were off 0.5%.
Craig Erlam, senior market analyst at Oanda, said: "It’s been a rocky few days for US equities and that may be starting to take its toll, with US futures pointing to a weaker open on Wednesday, as Europe and Asia post similar losses.
"It would appear some of the sparkle has disappeared from the markets at the start of December after what has been another impressive performance since the middle of November. The prospect of tax reform in the US, which has made progress, has aided the rally in recent weeks but clearly a number of significant hurdles remain and this is likely to continue to impact investor sentiment this month. A failure to deliver tax reform may well ensure the Santa rally eludes us this year."
David Cheetham, chief market analyst at XTB, said: "The passage through the Senate over the weekend of the GOP tax bill saw strong gains higher in US stocks on Monday’s open, but these have since faded and been handed back. There is a case to be made that this was a classic example of a buy-the-rumour-sell-the-fact trade but it could actually be down to the fact that the bill isn’t that positive for US firms' profits.
"The bill itself totalled almost 500 pages and its construction appeared far from scrupulous with handwritten notes added and pages seemingly crossed out with a large X in pen. Upon closer inspection the dropping of a repeal on the corporate alternative minimum tax (AMT), which basically sets a lower bound for corporate tax at 20%, has in effect maintained the floor for tax cuts at 20%."
In corporate news, retailer Fred's was sharply lower in pre-market trade after it cancelled its quarterly cash dividend and said it was looking at alternatives for its real estate and specialty pharmacy business. It also posted a wider loss for the third quarter.
Da Vita surged on the back of a deal to sell its physicians group to UnitedHealth, while Home Depot was likely to be in focus after announcing a new $15bn stock buyback programme.
On the data front, the ADP employment report - widely considered a pre-cursor to the nonfarm payrolls report - is due at 1315 GMT.
Erlam said: "While political stories are currently dictating market sentiment at the moment, there are a number of key data points still to come this week that will have an influence. Today we’ll get ADP employment numbers for November, ahead of Friday’s official jobs report, as well as unit labour costs and productivity numbers."