With traders reacting to a slew of U.S. economic data ahead of an early close on Wall Street, stocks have moved mostly higher during trading on Wednesday. The Nasdaq and the S&P 500 are adding to the gains posted in the two previous sessions, reaching new record intraday highs.
Currently, the Nasdaq is up 90.34 points or 0.5 percent at 18,119.11 and the S&P 500 is up 13.90 points or 0.3 percent at 5,522.91. The narrower Dow, on the other hand, has bucked the uptrend and dipped by 61.56 points or 0.2 percent at 39,270.29.
The strength on Wall Street may partly reflect optimism about the outlook for interest rates following the release of some weaker than expected economic data.
A report released by the Institute for Supply Management showed an unexpected contraction by U.S. service sector activity in the month of June.
The ISM said its services PMI slid to 48.8 in June from 53.8 in May, with a reading below 50 indicating contraction. Economists had expected the index to edge down to 52.5.
On the inflation front, the prices index dipped to 56.3 in June from 58.1 in June, indicating a modest slowdown in the pace of price growth.
“The Fed will be glad to see that the ISM Services PMI reported cooler inflation, and a little concerned that the economy seems to be losing momentum,” said Bill Adams, Chief Economist for Comerica Bank. “But controlling inflation is still the Fed’s number one priority.”
“They are unlikely to feel comfortable enough with progress on that front to cut rates at the July decision,” he added. “Even so, odds of a rate cut at the following decision in September are higher in light of June’s weak ISM PMIs and rising jobless claims.”
The Labor Department released a separate report showing a modest increase by first-time claims for U.S. unemployment benefits in the week ended June 29th.
The report said initial jobless claims rose to 238,000, an increase of 4,000 from the previous week’s revised level of 234,000.
Economists had expected jobless claims to inch up to 235,000 from the 233,000 originally reported for the previous week.
Payroll processor ADP also released a report showing private sector employment in the U.S. increased by slightly less than expected in the month of June.
ADP said private sector employment climbed by 150,000 jobs in June after rising by an upwardly revised 157,000 jobs in May.
Economists had expected private sector employment to increase by 160,000 jobs compared to the addition of 152,000 jobs originally reported for the previous month.
However, overall trading activity remains somewhat subdued, as the markets are set to close earlier than usual today and remain closed for the Independence Day holiday on Thursday.
Sector News
Gold stocks have shown a substantial move to the upside on the day, resulting in a 4.1 percent spike by the NYSE Arca Gold Bugs Index.
The rally by gold stocks comes amid a sharp increase by the price of the precious metal, with gold for August delivery surging $38.90 to $2,371.80 an ounce.
Considerable strength is also visible among steel stocks, as reflected by the 1.7 percent gain being posted by the NYSE Arca Steel Index.
Semiconductor and airline stocks are also seeing notable strength, while pharmaceutical stocks have moved to the downside.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan’s Nikkei 225 Index surged by 1.3 percent, while Hong Kong’s Hang Seng Index jumped by 1.2 percent.
The major European markets have also moved to the upside on the day. While the French CAC 40 Index is up by 1.2 percent, the German DAX Index is up by 1.1 percent and the U.K.’s FTSE 100 Index is up by 0.6 percent.
In the bond market, treasuries have moved notably higher in reaction to the weaker than expected economic data. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 8.3 basis points at 4.352 percent.
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