Stock Market Today: Stocks Mixed Ahead of August Employment Report

Stocks opened higher on Thursday but began to struggle with direction by midday. Today’s choppy price action came after the latest economic data showed the labor market continuing to cool, coming just ahead of Friday’s highly anticipated August employment report.

Before the opening bell, ADP data showed that private payrolls that number rose by 99,000 in August, the slowest increase since 2021.

“The downturn in the labor market has resulted in slower-than-usual hiring after two years of tremendous growth,” he said. Nela Richardsonchief economist at ADP. “Another indicator to watch is wage growth, which is stabilizing after a dramatic post-pandemic slowdown.”

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Indeed, the data showed that the median change in annual earnings for both job stayers (+4.8%) and job changers (+7.3%) was unchanged since July.

“Financial markets are pricing in a 50-50 chance of a Fed rate cut after ADP reported weaker-than-expected private-sector employment growth interest rates by half a percent in the decision of September 18, compared to a quarter of a percent,” he says Bill AdamsChief Economist at Comerica Bank.

The service sector grows for the second month in a row

Elsewhere, the Institute of Supply Management Services Purchasing Managers Index (PMI) showed the services sector expanded for a second straight month in August, rising to 51.5 from 51.4 in July.

“Overall, the latest available data point to continued growth, but at a slower pace than we saw in early 2024 or 2023,” Adams says. The data also cites political uncertainty as a headwind to growth, he notes, adding that “sometimes it’s worth stating the obvious: This headwind is temporary.”

Verizon confirms acquisition of Frontier Communications

In news about individual stocks, Verizon Communications (VZ) shares fell 0.4% after the telecom giant confirmed it would buy Frontier Communications Parent (FYBR, -9.5%) in $20 billion cash transaction.

Global Research Analyst at UBS Jan Hodulik (Neutral, equivalent to Hold) believes the deal “will strengthen operator interest in fiber assets following AT&T’s (T, +0.4%) expanded fiber strategy and T-Mobile’s (TMUS, -0.8%) series of fiber deals as the convergence of wireless and wireline connectivity gains momentum.”

The analyst adds that Verizon’s investment in fiber will be “a long-term growth driver in a maturing wireless market.”

Separately, VZ announced its 18th consecutive dividend increase, increasing its quarterly payout by 1.9%.

C3.ai in decline as subscription revenue falls

C3.ai (AI) shares fell 8.2% after the artificial intelligence (AI) software company subscription revenues were lower analysts’ expectations for the fiscal first quarter. The company also said it expects to generate negative free cash flow for the next two quarters, but predicts FCF to be positive for the full period fiscal year.

Wedbush Analyst Daniel Ives (Outperform, equivalent to Buy) sees this as a “minor bump in the road” but remains bullish on 2025. The company has a “strong pipeline across verticals coupled with solid revenue growth,” Ives says, and he predicts “solid net profit expansion as the AI revolution gains momentum over the next few years.”

Tesla shares soar after FSD announcement

Tesla (TSLA) stock rose 4.9%, making it one of the S&P 500’s best-performing stocks today, after the electric vehicle (EV) maker announced it plans to run fully autonomous driver assistance software (FSD) to Europe and China in the first quarter of 2025, subject to regulatory approval.

TSLA stock has surged more than 22% in the past six months, leaving some on Wall Street hesitant to give the green light. Truist Securities analyst William Stein is one of several people who have given Tesla a Hold rating. “Tesla’s rise has been an extraordinary success story,” Stein says, but “the company’s best days in terms of mass production, product innovation, and especially innovation in artificial intelligence (AI) are still ahead of us.”

Tesla’s profit helped Nasdaq Composite end the day up 0.3% at 17,127. S&P500 ended with a modest loss of 0.3% to 5,503, while Dow Jones Industrial Average fell 0.5% to 40,755.

Hfordersets

Stock Market Today: Stocks Mixed Ahead of August Employment Report

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