Investing.com -- Markets are digesting more labor market data on Wednesday, as investors attempt to gauge if the Federal Reserve may soon start to retreat from a period of aggressive policy tightening. Elsewhere, Elon Musk's artificial intelligence start-up xAI looks to raise $1 billion from investors, while Nvidia (NASDAQ:NVDA) boss Jensen Huang says that the AI semiconductor manufacturer is working closely with the U.S. to develop chips that comply with Washington's curbs on exports to China.
1. Futures point higher
U.S. stock futures opened in the green on Wednesday as ADP data showed further signs of a cooling labour market, reinforcing bets of a pause from the Federal Reserve.
The main indices on Wall Street were mixed on Tuesday, as markets digested fresh Labor Department figures showing that job openings in the U.S. dipped to their lowest mark in over two years in October. The numbers pointed to a cooling in labor demand, bolstering the case for the Fed to possibly begin backing away from a long-standing campaign of interest rate hikes.
The 30-stock Dow Jones Industrial Average and benchmark S&P 500 shed 0.2% and 0.1%, respectively, weighed down by energy stocks, while a jump in most of the Magnificent Seven big-name tech shares pushed the Nasdaq Composite up by 0.3%. U.S. Treasury yields, which typically move inversely to prices, also dipped.
2. ADP (NASDAQ:ADP) payrolls
U.S. private payrolls growth unexpectedly slowed in November, in a sign that the Federal Reserve's aggressive campaign of interest rate hikes could be impacting labor demand.
Private employers in the U.S. added 103,000 jobs last month, down from a revised mark of 106,000 in October, according to payroll processor ADP (NASDAQ:ADP). Economists had forecast an increase of 130,000 jobs.
Both the goods and services sectors saw weakness, with the manufacturing and leisure and hospitality industries posting declines.
“Restaurants and hotels were the biggest job creators during the post-pandemic recovery,” said Nela Richardson, Chief Economist at ADP. “But that boost is behind us, and the return to trend in leisure and hospitality suggests the economy as a whole will see more moderate hiring and wage growth in 2024.”
3. Musk's xAI looking to raise $1 billion
Elon Musk's xAI is seeking to raise up to $1 billion in an equity offering, according to a filing with the U.S. Securities and Exchange Commission, as the artificial intelligence start-up looks to strengthen its position in the increasingly competitive field of generative AI.
The group has already raised just under $135 million in equity financing, the document showed, and is asking investors to chip in a minimum of $2 million.
Microsoft-backed OpenAI's mega-popular chatbot ChatGPT has fueled a surge in fundraising for AI start-ups over the past year, although regulators have flagged some concerns over how the nascent technology could lead to the spread of misinformation.
Musk, who has previously warned of the dangers posed to humanity by AI, launched xAI in July with a vow to build a safer version of the technology. The company unveiled its first chatbot last month, an AI model named "Grok" that is trained with data taken from X, the social media platform formerly known as Twitter that Musk purchased in 2022. Musk has said that Grok will eventually be made available to premium subscribers to X and as a standalone app.
4. Nvidia working with U.S. to develop chips compliant with China curbs - Huang
Nvidia is working with U.S. authorities to develop chips for the Chinese market that adhere to Washington's export restrictions, Chief Executive Jensen Huang said on Wednesday.
Speaking at a news conference in Singapore, Huang added that the California-based semiconductor group will continue to "work with the government to come up with a new set of products that comply with the new regulations that have certain limits."
Nvidia, the world's biggest semiconductor manufacturer which has become an AI darling during a recent spike in hype over the technology, has controlled over 90% of China's AI chip market. However, fresh U.S. curbs on exports of cutting-edge AI chips to China have threatened to eat away at Nvidia's dominance in the country and boost local rivals.
In November, the group warned that its sales in China would "decline significantly" in its current quarter. Nvidia has also postponed the launch of its most powerful China-focused AI chip until the first quarter of next year, Reuters previously reported.
5. Oil inches lower
Oil prices dropped on Wednesday as traders fretted over disappointing OPEC+ production cuts, China’s economic woes and an unexpected build in U.S. crude stockpiles.
Crude prices have plummeted over the past six weeks, with a bulk of the losses coming in recent sessions after the Organization of the Petroleum Exporting Countries and its allies including Russia, a group known as OPEC+, largely underwhelmed markets with its plans to slash output further in 2024.
Concerns over China's economy, which could limit overall fuel demand in the world's second-largest crude consumer, also weighed, especially after ratings agency Moody's downgraded its outlook on Beijing's debt pile.
Additionally, data from industry group the American Petroleum Institute showed that U.S. oil inventories grew by 594,000 barrels in the week to Dec. 1, compared to expectations for a draw of over 2 million barrels.