US Indices Close Higher as ADP Jobs Data Falls Short of Expectations

U.S. stocks rebounded on Wednesday, ending a three-day losing streak as Treasury yields pulled back from their highs. The Dow gained around 0.6%, while the S&P 500 and Nasdaq each rose 0.5%.

Meanwhile, oil prices remained elevated, with Brent around $95.55 and WTI near $91.10, as renewed Iran-related attacks raised concerns about disruptions to shipping through the Strait of Hormuz and Bab al-Mandeb. Any further deterioration in shipping conditions could tighten oil supplies and push prices higher.

The Japanese yen strengthened sharply, gaining around 1% against the U.S. dollar to a four-month high of 156.75, as traders watched for potential currency intervention following the U.S.-Japan yen-buying operation in July. Overall, the combination of a stronger yen, softer dollar and elevated oil prices reflected shifting expectations around monetary policy and continued geopolitical risks.

Gold is recovering from its four-week low below $4,300, supported by a weaker U.S. dollar, lower Treasury yields and improved market sentiment. The recovery gained momentum after a weak ADP employment report, which showed private-sector jobs rising by just 38,000 in August, below the 48,000 forecast. This slightly reduced expectations for a September Fed rate hike, with the probability falling from 67% to around 62%, providing additional support for gold.

The dollar also faced pressure from a stronger Japanese yen and expectations of possible BoJ tightening, while stabilizing oil prices eased some inflation concerns. However, ongoing Middle East tensions remain a source of volatility.

The main catalyst will be Fridays U.S. Nonfarm Payrolls report, expected to show 58,000 new jobs and an unemployment rate of 4.1%. A weak jobs report could support gold by reducing Fed hike expectations, while stronger-than-expected employment data could strengthen the dollar and trigger another gold selloff.