U.S. futures fell after a round of better-than-expected economic data. Then they rallied early in the U.S. trading session.
And now they’re in the red in what appears to be an accelerating selloff.
The Dow is down 107 points, the S&P is down 14 points, and the Nasdaq is down 28 points.
Markets began moving lower just ahead of the surprisingly strong ADP jobs report, which showed U.S. companies added 215,000 net new private payrolls in November. This was much stronger than the 170,000 expected by economists.
Even better, October’s jobs number was revised up to 184,000 from an earlier reading of 130,000.
This stronger than expected economic data increases the likelihood that the Federal Reserve will begin tapering its stimulative quantitative easing program.
“The key risks to markets are US growth being too strong (leading to earlier-than- expected tapering), China growth surprising on the downside, too much corporate spending (bad for margins and depreciation charges) and a European political event,” said Credit Suisse’s Andrew Garthwaite on Tuesday.
It certainly seems a bit ironic that stocks would take a hit because economic growth is stronger than expected.
Of course the risk of liquidity being unexpectedly sucked out of the market is a hazard everyone should be worried about.