Wall St set for lower open as focus shifts to service sector data By Reuters

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© Reuters. FILE PHOTO: The New York Stock Exchange is pictured in the Manhattan borough of New York City, New York, U.S., April 16, 2021. REUTERS/Carlo Allegri/File Photo

By Shashank Nayar

(Reuters) -Wall Street’s main indexes were set to drop at the open on Thursday as investors weighed data indicating a pick up in jobs growth for cues on the trajectory of an economic recovery and inflation.

U.S. private payrolls increased by 978,000 in May, far more than expected, an ADP national employment report showed, setting an upbeat tone for the closely watched official jobs report on Friday.

A separate report indicated the number of Americans filing new claims for unemployment hit its lowest level since the start of the pandemic.

ISM’s survey on the service sector, which accounts for two-thirds of the U.S. economy, will be released after markets open.

“The investor consensus is that inflation will be more transient in the near term but the probability of inflation moving above targets next year is increasing and there is an unusual degree of uncertainty among investors regarding the inflation outlook,” said Jon Adams, senior investment strategist, BMO Global Asset Management in Chicago.

“The U.S. economy will continue to rebound and that might lead to some inflation worries in the long-term; but we remain largely constructive on the near to medium term inflation outlook.”

Concerns over a labor shortage fueling inflationary pressures have raised fears that the Federal Reserve would pare back its crisis support sooner than expected, despite central bank officials’ reassurances to the contrary.

The Fed on Wednesday said it would begin to unwind the corporate bond holdings it acquired last year to calm credit markets, adding that it was unrelated to its monetary policy.

The blue-chip Dow has edged higher in the past five session as investors piled into stocks likely to benefit from an economic reopening.

At 8:40 a.m. ET, were down 176 points, or 0.51%, were down 27.25 points, or 0.65%, and were down 132.25 points, or 0.97%.

Shares of AMC Entertainment (NYSE:) reversed sharp gains to fall 5.8% after launching its second share issue in three days.

FireEye (NASDAQ:) Inc dropped 9.0% after the cybersecurity firm said it would sell its products business, including the FireEye name, to a consortium led by private equity firm Symphony Technology Group for $1.2 billion in cash.

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