US stock market opened lower on Wednesday after a surprise drop in private payrolls, the first decline in two years. The Dow Jones Industrial Average fell 39.3 points, or 0.09%, to 44,455.66. The S&P 500 dipped 4.1 points, or 0.07%, to 6,193.88, while the Nasdaq Composite slipped 18.5 points, or 0.09%, to 20,184.37 at the opening bell.
Private sector hiring unexpectedly contracted in June, according to payroll processor ADP, signaling potential cracks in the labor market even as investors push the S&P 500 to new highs. The report showed a loss of 33,000 private payroll jobs, the first decline since March 2023, defying economists’ expectations of a 100,000-job gain. May’s job growth was also revised downward to 29,000 from 37,000.
While the ADP report often diverges from the official government jobs data, it comes ahead of Thursday’s nonfarm payrolls release, where economists forecast a gain of 110,000 jobs for June and a slight uptick in the unemployment rate to 4.3%. Weekly jobless claims, also due Thursday, are expected to come in at 240,000. The updates arrive during a holiday-shortened week, with markets closing early Thursday and remaining shut Friday for the July 4 holiday.
June’s job losses were concentrated in service industries. Professional and business services saw a sharp decline of 56,000 positions, while health and education sectors lost 52,000 jobs. Financial activities also shed 14,000 roles. In contrast, goods-producing sectors, including manufacturing and mining, added a combined 32,000 jobs, helping offset broader declines.
Annual pay growth moderated in June. Job stayers saw their pay rise 4.4%, slightly down from 4.5% in May. For job switchers, wage growth dipped to 6.8% from 7%. Despite the weak hiring data, the S&P 500 has rallied more than 4% year-to-date, staging a strong recovery in the second quarter after concerns over Donald Trump’s tariff threats briefly dragged the benchmark toward bear market territory.