Daily Market Color February 3, 2016Markets Fluctuate on Mixed US Economic Data US stocks and Treasuries have both struggled for direction today with the release of generally mixed US economic data. Markets opened poised for a risk on day as stocks opened stronger on firmer oil prices and a stronger-than-expected ADP Employment report. The ADP report showed private employers added 205,000 jobs in January (195,000 estimated) after a 267,000 increase in December. Manufacturers and energy companies reduced headcount, as expected, but job gains were broad across most other industries. January is the third consecutive month that job gains exceed 200,000, indicating the labor market remains fairly strong despite the slowdown in growth in the fourth quarter. The data comes ahead of Friday’s more comprehensive and closely watched employment report from the US government. A combination of a disappointing January ISM non-manufacturing report and dovish comments from New York Fed President Dudley caused stocks to reverse course and Treasuries to rally back. The ISM’s index of non-manufacturing activity fell to 53.5 in January from 55.8 in December, missing economists’ expectations of 55.1. The slowdown in the service sector momentum is worrisome because it could indicate that existing weakness in manufacturing is beginning to weigh on other sectors as well. The Fed’s Dudley said that “financial conditions are considerably tighter than they were at the time of the December meeting”, adding to the negative market sentiment. Dudley cited the weakening outlook for the global economy and further strengthening of the dollar as factors that could have “significant consequences” for the health of the US economy. His comments suggests an interest rate hike in March, once considered likely, is now much less likely to be implemented.