Pre-market futures are off their lows from the very early morning, with fresh Q4 earnings reports and private-sector jobs numbers giving something of a jolt to market indexes. Interestingly, this jolt has sent the small-cap Russell 2000 up but the tech-heavy Nasdaq down. The Dow is +142 points, the S&P 500 +10, the Nasdaq -66 and the Russell +12 points.
Private Sector Payrolls Only Half of Estimates
Private-sector payrolls for January have been reported this morning by Automated Data Processing ADP, just like nearly every first Wednesday of a month. These came in roughly half of expectations to +22K, down from a downwardly revised +37K the previous month. That said, this represents the first back-to-back monthly job gains in the private sector since April and May of last year.
Services employment carried almost all of the private-sector hires last month, +21K to +1K for Goods-producing. Once again, most hires were conducted in the Healthcare Services space, +74K, followed by +14K in Financial Services and +9K in Construction. Professional & Business Services shed an eye-opening -57K private-sector jobs in the month, and Manufacturing has not seen a month of positive ADP job growth since the early months of 2024.
Interviewed this morning on CNBC’s “Squawk Box,” ADP Chief Economist Nela Richardson put it succinctly: “Hiring has been following the consumer, not technology…” Thus, while we’ve seen the AI trade ignite the stock market over the past couple years (“risk-off” periods like the one we’ve just undergone notwithstanding), this is not translating to the private-sector jobs market as of yet.
It’s possible the Construction sector job gains cited in this morning’s ADP report are a signal that data-center buildouts are adding to the labor force, but it feels a bit early to stick a flag in that. Longer-term, the fear is that AI technology will actually replace employees across a wide array of industries — but we’re a ways off from that narrative, as well.
Finally, a realignment benchmark for ADP has been released as part of this morning’s private-sector employment news. This new methodology, called a “true-up” by Dr Richardson, shows -212K fewer hires in the private sector for all of 2025. Thus, we went from +771K total private-sector hires in 2024 to +398K in 2025. If we’re looking for simple numbers with which to assess our current labor environment, this one might fit the bill — even if it’s a tough pill to swallow.
The partial government shutdown is now putting a delay on Friday’s non-farm payroll report from the U.S. Bureau of Labor Statistics (BLS). Expectations are for job gains of +60K; the Unemployment Rate last time around came in at a welcome, cooler +4.4%.
Q4 Earnings Reports Ahead of the Open
We see a cadre of Big Pharma companies putting out Q4 earnings this morning, most with positive results. Best of these is arguably Eli Lilly & Co. LLY, which posted a +7.9% earnings surprise to $7.54 per share, on revenues of $19.29 billion which also surprised estimates by +7.9%. Strength in its diabetes/weight loss drugs Zepbound and Mounjaro also signaled positive growth going forward.
Other pharma companies reporting this morning are AbbVie ABBV and Novartis NVS, both of which brought a Zacks Rank #3 (Hold) rating to today’s earnings reports. AbbVie posted earnings of $2.71 per share versus estimates of $2.66, while Novartis booked $2.03 per share in the quarter, beating the Zacks consensus by 4 cents. However, while NVS shares are up +1.6% on the news, ABBV is down -3%.
Continuing the good fortunes in the oil refining space, Phillips 66 PSX clobbered earnings estimates this morning: $2.47 per share versus $2.11 expected, and in another stratosphere from the -$0.15 per share reported in the year-ago quarter. Shares are up +1.3% at this hour of pre-market trading.
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This article originally published on Zacks Investment Research (zacks.com).
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