Futures add to losses after ADP jobs report, shutdown enters second day
U.S. stock index futures declined Wednesday following a weaker-than-expected private-sector jobs report and as the impasse over the U.S. spending bill continued for a second day.
Private employers added 166,000 jobs in September, according to the ADP National Employment Report. Economists surveyed by Reuters expected a gain of 180,000. The ADP data is usually seen as a preview to the widely-watched monthly government jobs report, which is likely to be delayed due to the shutdown.
The first partial U.S. government shutdown since 1996 has left nearly 800,000 federal employees on unpaid leave, after Democrats and Republicans failed to agree on a solution before Monday's midnight deadline. It is uncertain when the standoff could come to an end, but the dispute raises concerns over the looming debt ceiling, which has to be raised before October 17 if the government is to avoid a default.
"We believe the U.S. government shutdown over the continuing resolution should be primarily seen through one prism – does it increase or decrease the chances of a smooth resolution to the debt ceiling? For now, the markets seem to believe that this shutdown will cause only minor disruption and will, at the very least, not worsen the debt ceiling negotiations – and we agree," Barclays analysts Hamish Pepper and Ajay Rajadhyaksha said in a research note.
Weekly mortgage applications slipped last week as a drop in demand for purchase loans outweighed an increase in refinancing demand, according to the Mortgage Bankers Association.
Two Federal Reserve officials Eric Rosengren and James Bullard will also be speaking on the economy.
Monsanto slumped after the agricultural biotechnology company posted quarterly results that missed expectations and handed in full-year earnings that also fell short of estimates.
Microsoft ticked lower after three of the top 20 investors in the software giant lobbied to press for Bill Gates to step down as chairman of the company he co-founded 38 years ago, according to sources.
Alcoa slid after Deutsche Bank cut its rating on the aluminum producer and former Dow component to "sell" from "hold."
Across the Atlantic, Italy faced its own political difficulties, with Prime Minister Enrico Letta due for a confidence vote on Wednesday. The vote comes after five ministers from Silvio Berlusconi's center-right party tendered their resignations at the weekend at his behest. Letta has rejected the resignations and Berlusconi could now face a rebellion in the confidence vote.
In addition, the European Central Bank will hold its policy-setting meeting later in the day. Investors are likely to focus on whether the central bank will hint at the need for further long-term refinancing operations (LTRO) to help support the economy.
—By CNBC's JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)
On Tap This Week:
WEDNESDAY: Bernanke speaks, Dell event
THURSDAY: Challenger job-cut report, jobless claims, factory orders, ISM non-mfg index, natural gas inventories, Fed's Fisher speaks, Fed Gov Powell speaks, Fed balance sheet/money supply; Earnings from Constellation Brands
FRIDAY: Nonfarm payrolls, Fed's Kocherlakota speaks
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