* Microsoft trims forecast due to FX impact
* ADP May private sector jobs +128,000 vs est +300,000
* S&P 500 +1.36%, Nasdaq +2.38%, Dow +0.79% (Updates with afternoon trading)
By Anisha Sircar and Noel Randewich
June 2 (Reuters) – Wall Street rallied on Thursday, led by Tesla, Nvidia and other megacap growth stocks in a choppy session ahead of a key jobs report due on Friday.
Tesla, Nvidia and Meta Platforms each jumped more than 5%, lifting the S&P 500 and Nasdaq.
Of the 11 S&P 500 sector indexes, nine rose, led by consumer discretionary, up 2.88%, followed by a 2.49% gain in communication services.
The Philadelphia Semiconductor index jumped 3%.
U.S. stocks recovered from a drop earlier in the day after Federal Reserve Vice Chair Lael Brainard said she backs at least a couple more half percentage point interest rate hikes, and sees little case for pausing rate hikes in September if price pressures fail to cool.
The U.S. stock market has made a modest recovery in recent weeks, with investors debating whether the worst of a selloff that has dominated Wall Street in 2022 may be over.
“Volatility has become the norm, not the exception. Stocks are being held hostage by inflation, and until inflation gets under control, volatility is likely to remain high,” said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management in Minneapolis, Minnesota.
The S&P 500 is now down about 13% from its record high close in early January.
U.S. private payrolls increased far less than expected in May, suggesting demand for labor was starting to slow amid higher interest rates and tightening financial conditions, the ADP National Employment report showed.
All eyes are now on the government’s nonfarm payrolls data on Friday, with investors looking for fresh signs of the U.S. economy’s health and how aggressively the Fed may continue to raise interest rates. Analysts are expecting the economy to have added 325,000 jobs last month.
In afternoon trading, the S&P 500 was up 1.36% at 4,157.19 points.
The Nasdaq gained 2.38% to 12,280.47 points, while the Dow Jones Industrial Average was up 0.79% at 33,070.92 points.
Microsoft edged up 0.1%, even after the software maker cut its fourth-quarter forecast for profit and revenue, making it the latest U.S. company to warn of a hit from a stronger U.S. dollar.
Hewlett Packard Enterprise Co slid 6.5% after the technology firm gave a disappointing full-year forecast due to currency headwinds and its exit from Russia.
Ford Motor Co rose 2.2% after the automaker said it plans to invest $3.7 billion in assembly plants in Michigan, Ohio and Missouri.
Across the U.S. stock market, advancing stocks outnumbered falling ones by a 3.2-to-one ratio.
The S&P 500 posted one new highs and 29 new lows; the Nasdaq recorded 28 new highs and 95 new lows. (Reporting by Anisha Sircar and Devik Jain in Bengaluru, and by Noel Randewich in Oakland, Calif.; Editing by Marguerita Choy)