Stocks ended higher Wednesday, with the S&P 500 and the Nasdaq hitting record highs, as AI giant Nvidia surged and investors gained confidence that the Federal Reserve will begin its policy easing later in the autumn.
The Dow Jones Industrial Average gained 96.04 points, or 0.25%, to finish the session at 38,807.33.
The S&P 500, which also hit a new intraday all-time high, ended up 1.18% and closed at 5,354.03, a fresh record.
The tech-heavy Nasdaq advanced 1.96% to 17,187.90, also a new record, as Nvidia surpassed Apple in market cap, making the chipmaker the second-most valuable public company, behind Microsoft.
Updated at 11:41 PM EDT
Holding gains
Stocks are extending their earlier advance into the final hours of trading, with the S&P 500 up 46 points, or 0.87%, and the Nasdaq up 272 points, or 1.62%. The Dow, while green, is lagging its peers with an 11 point bump.
HPE shares remain the standout gainer, rising more than 14%, and adding nearly $3 billion in value, after a better-than-expected second quarter earnings report that included big gains in AI sales.
Related: Analysts race to reset HPE stock price targets as AI powers earnings
Updated at 11:40 AM EDT
Treasury yield pullback
Benchmark 10-year Treasury note yields extended their week-to-date slump, falling another 6 basis points on the session to 4.287%, the lowest in more than two months, following softer price data in the ISM services report, a muted ADP jobs report and the Bank of Canada's quarter point rate cut.
"Prices paid by services organizations are still rising but at least the pace is slowing," said Jeffrey Roach, chief economist for LPL Financial in Charlotte. "We are continuing to see several sectors holding on filling vacancies which could put a curb on upcoming payroll data."
The 10-year real yield just dipped below 2.0% for the first time since April 5. It hit a high of 2.28% on April 30 and as recently as May 25 was 2.25%. This could be a meaningful shift.
— Tipswatch (@TipsWatch) June 5, 2024
Updated at 10:05 AM EDT
Hot sector
The Institute for Supply Management's benchmark reading for the U.S. services sector, the biggest contributor to domestic GDP growth, jumped to 53.8 points in May, the highest reading since August of last year, and well ahead of the 50 point mark that separates growth from contraction.
The underlying employment index, however, remained south of the 50 point mark, at 47.1, even as it rose from April levels. The prices paid component, meanwhile, eased to 58.1 points from 59.2 points in April.
ISM Services PMI 53.8 - best since August last year pic.twitter.com/jTLRmdYwKw
— Mike Zaccardi, CFA, CMT 🍖 (@MikeZaccardi) June 5, 2024
Updated at 9:42 AM EDT
Solid open
The S&P 500 was marked 17 points, or 0.33%, higher in the opening minutes of trading, with the Dow up 16 points and the Nasdaq rising 109 points, or 0.65%, thanks to the ongoing pullback in Treasury yields.
Benchmark 10-year notes eased to 4.311%, while 2-year notes extended their recent decline to 4.760%, following the muted ADP jobs data.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.03% lower at 104.161.
S&P 500 Opening Bell Heatmap (Jun. 05, 2024)$SPY +0.37% 🟩$QQQ +0.73% 🟩$DJI +0.13% 🟩$IWM +0.58% 🟩 pic.twitter.com/btxpRndwDx
— Wall St Engine (@wallstengine) June 5, 2024
Updated at 8:31 AM EDT
Job market cracks
Private sector hiring slowed modestly last month, payroll processing group ADP reported, while wage gains for job-changes fell to the lowest level in three years, adding to evidence of a slowing labor market.
ADP said 152,000 new jobs were added last month, the lowest tally since January, while the April total was revised modestly lower to 188,000.
“Job gains and pay growth are slowing going into the second half of the year,” said Nela Richardson, chief economist, ADP. “The labor market is solid, but we're monitoring notable pockets of weakness tied to both producers and consumers.”
Stock Market Today
Stocks ended higher across the board on Tuesday amid the biggest two-day pullback of the year for U.S. Treasury yields following Labor Department data that showed a surprising level of slack in the long-resilient job market.
Just over 8 million positions went unfilled in April, according to the department's Jolts report, a near 300,000 decline from March levels and the lowest in more than three years.
The reading puts further focus on today's National Employment Report from payroll processing group ADP, slated for 8:30 am Eastern Time. That report is expected to show around 173,000 private sector jobs were created last month.
The Institute for Supply Management will also publish its final reading of nonmanufacturing activity in May at 10 am Eastern.
Related: The Fed doesn't want to talk about stagflation. It might not have a choice.
The Bank of Canada will unveil its latest interest rate decision at 9:45 am Eastern Time, with economists expecting Governor Tiff Macklem to deliver a 25 basis point reduction in the so-called prime rate, taking it to 4.75%.
The European Central Bank, meanwhile, is expected to make a similar move Thursday in Frankfurt, with bets that President Christine Lagarde will reduce the benchmark deposit rate, which currently sits at 4%, to 3.75%.
The softening economic data, as well as the first incremental easings from other central banks, have investors adding to bets that the Fed will implement the first of its rate cuts in September.
The CME Group's FedWatch pegs the odds of a September rate cut at around 65%, up from less than 50% late last month, with the chances of a second cut before the end of the year beginning to mount.
Benchmark 2-year Treasury note yields were last marked at 4.787%, after testing the 5% level last month, while 10-year notes were largely steady at 4.345%.
On Wall Street, futures contracts tied to the S&P 500 suggest a 12-point opening-bell gain, with the Dow Jones Industrial Average called 33 points higher and the Nasdaq set for an 85-point advance.
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Stocks on the move include Hewlett Packard Enterprise (HPE) , the cloud-focused tech group spun from the former HP, which surged 14.5% in premarket trading following a solid revenue outlook tied to robust artificial-intelligence demand.
CrowdStrike (CRWD) shares were also on the move, rising 7.25%, after the cybersecurity group posted better-than-expected fiscal-first-quarter earnings and a solid near-term forecast.
Discount retailer Dollar General (DG) was marked 3.1% higher following a report from The Wall Street Journal that suggested the group is looking to sell its Family Dollar division.
More Wall Street Analysts:
- Analysts compute new HP stock price target after earnings
- Analysts retool C3.ai stock price target after earnings
- Analysts reboot Dell stock price targets ahead of earnings
In overseas markets, Europe's Stoxx 600 rose 0.65% in Frankfurt ahead of tomorrow's ECB rate decision, while Britain's FTSE 100 added 0.31% in London.
Overnight in Asia, the regionwide MSCI ex-Japan index rose 1.04% into the close of trading, while the Nikkei 225 closed 0.89% lower in Tokyo.
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