The Standard & Poor’s 500 index of U.S. stocks on Wall Street on Wednesday hit an all-time daily high, after fresh economic data supported a scenario in which the Federal Reserve will be able to start easing monetary policy.
Traders will see a cut session. Ahead of the Independence Day holiday, with stock and bond markets closing at 1300 and 1400 ET respectively.
The S&P (SP500) was the last index. Up 0.40% At a record high of 5,530.85 points. The Nasdaq Composite Index (Compound: Indian) It exceeded the 18,100 point level for the first time ever, and the last was 0.76% higher to 18,166.53.
Dow Jones Index (DJI) go against the grain, Slippage 0.09% To 39294.85 points. The average leading stocks declined due to losses in health care components.
Of the 11 S&P sectors, seven were in the green.
The economic calendar was full of indicators, but three in particular caught attention. Before the opening bell, the ADP Research Institute said private-sector job creation slowed for a third straight month, adding 150,000 jobs in June compared with 157,000 in May. Economists had expected a gain of 163,000 jobs.
Shortly after the ADP report, the U.S. Labor Department said the number of Americans filing initial claims for unemployment benefits last week rose to 238,000. But more importantly, claims for job security rose for a ninth straight week and continued to hover near their highest level since November 2021.
Insured unemployment, also known as continuing claims, is the number of people who have already filed for initial unemployment benefits and then filed another claim to continue receiving benefits for another week.
A resilient labor market and low unemployment — along with inflation — have been key reasons why the Fed has stuck to its 23-year high of interest rates and has yet to gain enough confidence to ease monetary policy. However, today’s data suggests signs of cracking in this area.
The third economic indicator that caught attention today was the Institute for Supply Management. According to the ISM, the U.S. service sector contracted in June to 48.8%, its lowest level in more than four years, suggesting that the economy is slowing down—something the Federal Reserve wants to see before it can cut interest rates.
“One positive development in the ISM services report is that the price component is back in line with its pre-Covid norm since last summer. A good sign for the Fed, which is concerned about stubborn service sector inflation,” Parker Ross, chief global economist at Arch Capital Group, said on Twitter.
“The market reaction to the shockingly weak ISM services report was very muted. In previous instances when the headline reading missed expectations by the same or more, the average daily move for the S&P 500 (SP500) was a gain or loss of 1.1%,” Bespoke Investment Group noted on X.
Minutes from the Federal Reserve’s June meeting are due later today.
Turning to fixed income markets, US Treasury yields fell as market participants bought bonds after a series of economic data. The yield on the 30-year note (US30Y) fell 7 basis points to 4.54%, while the yield on the 10-year note (US10Y) fell 6 basis points to 4.37%. The less interest-rate-sensitive 2-year note (US2Y) yield fell 4 basis points to 4.71%.
You can view live data on the performance of Treasury yields across the curve on the Seeking Alpha bonds page.
Looking at active stocks on Wednesday, Paramount (PARA) (PARAA) was the biggest percentage gainer on the S&P 500 (SP500), after a CNBC report said the film studio’s merger deal with Skydance Media was back on track.
