Private payrolls and initial claims — What you need to know in markets on Thursday

Myles Udland
Markets Reporter

In a holiday-shortened trading week, Thursday will bring us the first of two days of labor market data that will culminate with Friday’s big jobs report from the government.

At 8:15 a.m. ET, data provider ADP will release its report on private payroll growth in June, with economists on Wall Street looking for 190,000 jobs to be added to the private sector during the month.

Fifteen minutes later, the Bureau of Labor Statistics will release its weekly report on initial jobless claims, with economists expecting this tally of first-time filings for unemployment insurance to hold steady near 240,000.

This data will follow what was a pretty quiet day in markets, with the Dow finishing down 1 point, or 0.01%, while the S&P 500 eked out a fractional gain of 0.15%, and the tech-heavy Nasdaq gained 40 points, or 0.6%.

The Federal Reserve on stocks

The highlight of the day on Wednesday was the release of the minutes from the Federal Reserve’s latest meeting, held on June 13-14. (If this got you wondering why you hadn’t just taken the whole week off, you aren’t alone.)

And while some folks were looking for more color on what the Fed plans to do with winding down its balance sheet, the main highlight was commentary on markets, volatility and the things we talk about regularly here on Yahoo Finance.

“Some participants suggested that increased risk tolerance among investors might be contributing to elevated asset prices more broadly,” the minutes read. “A few participants expressed concern that subdued market volatility, coupled with a low equity premium, could lead to a buildup of risks to financial stability.”

In English, this indicates that some Fed officials are concerned about the lack of volatility we’re seeing in markets.

We’ve written in the past about how volatility in the market is the perfect thing for investors to talk about because both the presence and absence of volatility is something to be worried about, and it appears the Fed is also worried about this.

See? The Fed is just like you and me.

Fed chair Janet Yellen

Now, this year has been unique when it comes to a lack of volatility, not only as measured by the VIX, but also when simply looking at the market’s behavior.

Ryan Detrick of LPL Financial wrote this week that the S&P 500’s biggest peak-to-trough drop this year is just 2.8%, the second-smallest on record. The average pullback in the first half of the year since 1950 has been 9%.

And while the Fed’s policy is nominally focused on the labor market and inflation, the central bank also seeks to foster financial stability. Certainly, not all drops in the price of stocks will lead to widespread instability in financial markets, but the kinds of declines we saw after the tech bubble burst or Lehman Brothers went bankrupt are stresses on the system.

Some will certainly see the Fed’s commentary on stock prices as the central bank moving into areas where it need not be commenting. But this also, to our minds, reinforces that while central bankers are often seen as something like wizards behind the curtain, they too read financial news and are aware of the themes driving financial markets and the feedbacks these can create in the real economy.

Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland

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