Traders work on the floor of the New York Stock Exchange during afternoon trading on June 3, 2024.
Michael M. Santiago | Getty Images
The S&P 500 gained Wednesday as AI-darling Nvidia rose to a record and weak labor market data gave investors hope the Federal Reserve might move to lower interest rates later this year.
The broad market index traded 0.3% higher, while the Nasdaq Composite advanced 0.8%. The Dow Jones Industrial Average slipped 42 points, or 0.1%.
Private payroll data from ADP showed hiring slowed to 152,000 jobs last month, far below the 175,000 economists polled by Dow Jones expected. The data is the latest sign of weakness in the labor market that investors hope will give the Federal Reserve enough evidence to cut benchmark interest rates.
The latest labor market data sent the benchmark 10-year Treasury yield sliding to 4.31%, down from 4.62% last week. The odds that the Federal Reserve will lower its current 5.25%-5.50% fed funds rate as soon as September increased, based on futures contracts traded on the CME.
Traders also regarded data on activity in the services sector. Services PMI hit a 12-month high of 54.8 in May, meeting consensus estimates and reaching the highest level in a year. Attention will turn to weekly jobless claims numbers on Thursday and Friday’s all-important May jobs report.
“We see the S&P 500 reaching 5,500 by year-end amid Fed rate cuts, robust profit growth, and the secular growth trend brought by artificial intelligence” UBS Global Wealth Management chief investment officer Solita Marcelli wrote in a note on Wednesday.
UBS Wealth Management expects the Fed to cut rates twice this year, providing “a healthy backdrop for stocks,” added Marcelli.
Along with Nvidia, other tech shares were leading Wednesday’s gains. Hewlett Packard Enterprise climbed more than 13% after fiscal second-quarter revenue topped Wall Street estimates. CrowdStrike jumped 7% on stronger-than-expected earnings and guidance.
Fellow technology firm and AI play Meta Platforms climbed 2%.
Gains on Wall Street were limited, however, as some investors worry that weak economic data could signal a broader slowdown and outweigh the impact of lower borrowing costs.
Job opening and labor turnover data from Tuesday morning showed 8.059 million vacancies in April, the lowest level in more than three years.
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