Stock rose at the start of trade Wednesday, putting the S&P 500 index on track to mark its fifth straight gain and its third consecutive record close, as investors bet on price-support from monetary policy.
Market participants were also digesting new job-growth estimates from ADP as well as jobless claims data that paint a conflicting picture of the labor market ahead of the much anticipated government job report, due Friday.
U.S. markets will be closed on Thursday for Independence Day, with equity markets closing at 1 p.m. Eastern Time and bond markets set to close at 2 p.m. on Wednesday.
How are benchmarks faring?
The Dow Jones Industrial Average DJIA, +0.21% was up 58 points, or 0.2%, at 26,844, the S&P 500 index SPX, +0.28% added 6 points, or 0.2%, higher at 2,980, while the Nasdaq Composite Index COMP, +0.30% rose 19 points to reach 8,121, a rise of 0.3%.
On Tuesday, the Dow finished up 69 points, or 0.3%, at 26,786.75, the S&P 500 gained 0.3%, or 8.7 points, setting a record of 2,973.02, while the Nasdaq Composite Index closed about 18 points higher, or 0.2%, to reach 8,1069.06.
The S&P 500 is on pace for a third all-time high in a row, and set a new intraday high of 2,980.81 early Wednesday, while the Dow and Nasdaq are within 1% of their own records.
What’s driving the market?
Two measures of U.S. labor-market strength provided investors with conflicting signals ahead of the official government estimate of job growth, due Friday morning.
Payroll firm Automatic Data Processing Inc. ADP, +0.26% in collaboration with Moody’s Analytics, estimated the U.S. private sector added 102,000 new jobs in June, below the 140,000 expected by economists, according to FactSet, though it came in above the 41,000 jobs created in May.
“It’s certainly a rebound from last month but significantly below expectations and some of the weakest data seen so far this year,” Mike Loewengart, vice president of investment strategy at E-Trade said in an email.
“Although, warning signs shouldn’t be flashing just yet,” he added. “This is a signal of slowing, but certainly not stagnating economic growth. The markets are really looking to corroborate economic evidence for a rate cut, so today’s data could put some energy into this short trading day.”
A report on new claims for unemployment benefits for the week ended June 29, however, showed those falling by 8,000 to 221,000, roughly in line with expectations, according to a MarketWatch poll, and at levels that indicate that businesses aren’t laying off workers at anywhere near a worrying pace.
Investors may be heartened by an easy-money regime sweeping the globe after current International Monetary Fund President Christine Lagarde was nominated to replace Mario Draghi as the head of the European Central Bank. Lagarde’s past rhetoric suggests that she may be more inclined to advocate for easier monetary policy, which could continue to fuel risk-taking here and abroad.
Lagarde’s nomination comes as President Donald Trump nominated Christopher Waller, the research director at the Federal Reserve Bank of St. Louis, and Judy Shelton, the U.S. executive director for the European Bank of Reconstruction and Development, for influential posts on the Federal Reserve’s Board of Governors. Waller is seen as an easy-money advocate, while Shelton recently told The Wall Street Journal that she thinks the Fed should lower interest rates immediately.
“Yesterday saw a few more events that suggested that the turn in global policy direction toward dovishness has ‘staying power’ beyond the next few weeks,” wrote Thierry Wizman, futures strategist at Macquarie, in a Wednesday note to clients. “Markets are liking that this morning. How else to explain the further decline in the yields across the [developed markets], the rally in stocks, and gold’s surge yesterday evening?”
Analysts say the policy backdrop has helped to drive riskier assets higher in price, while the fall in bond yields is supportive of equities also, even though it suggests that global economies are weakening.
German 10-year government debt TMBMKDE-10Y, -4.97% known as bunds, saw their yields fall to a fresh record low below zero to minus 0.381%, while the U.S. 10-year Treasury note TMUBMUSD10Y, -1.17% slipped further toward its lowest since 2016 at 1.960%.
Also on the radar are two measures of the U.S. services sector, Markit services PMI and the ISM nonmanufacturing index, due at 9:45 a.m. and 10 a.m., respectively. A report on factory orders for the month of May will also be published at 10 a.m.
Which stocks are in focus?
Electric-car maker Tesla Inc. TSLA, +6.71% reported delivery of 95,200 cars in the second quarter Tuesday afternoon, a record for a three-month period and higher than analysts expected. Shares were up 7.1% Wednesday.
Shares of Symantec Corp. SYMC, +14.64% opened at their highest level since May 10, 2018 after a report of a potential buyout by chip makerBroadcom Inc. AVGO, -3.17% Shares of Symatec rose 15% Wednesday morning.
Canopy Growth Corp. CGC, -2.72% WEED, -3.87% said Wednesday that its co-Chief Executive Bruce Linton is stepping down from that role and will leave the board. U.S. listed shares of he cannabis company, the largest by market capitalization, were down 35%. Shares Constellation Brands Inc. STZ, -0.67% which owns a $4 billion minority stake in Canopy, fell 0.2%
How are other markets trading?
Meanwhile, overnight Hong Kong’s Hang Seng Index HSI, -0.07% fell less than 0.1% on Wednesday while China’s Shanghai Composite Index SHCOMP, -0.94% declined 0.9%, while the CSI 300 Index 000300, -1.11% closed down 1.1%.
European stocks rose across the board, with the Stoxx Europe 600 SXXP, +0.74% rising 0.7%. Gold prices GCN19, +0.64% were on the rise, up 1.1%.
The U.S. dollar DXY, -0.02% was down 0.05%, while oil prices US:CLM9 gained altitude after a sharp fall on Tuesday.
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