U.S. stocks closed higher Wednesday, during a holiday-abridged trading session, with all three major benchmarks setting record closes as investors cheered signs that global monetary policy will become more stimulative in the months ahead.
Market participants also digested new U.S. 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. equity markets closed early Wednesday, at 1 p.m. Eastern Time, and will closed on Thursday for Independence Day.
How did the benchmarks fare?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +1.06% rose 179.32 points, or 0.7%, at 26,966, it’s first record close since Oct. 3, while the S&P 500 index /zigman2/quotes/210599714/realtime SPX +1.49% set its third-straight record close, rising 22.81 points, or 0.8% to 2,995.82. The Nasdaq Composite index /zigman2/quotes/210598365/realtime COMP +2.32% ended the day at an all-time high of 8,170.23, adding 61.14 points , or 0.8%.
The S&P also set a new intraday high of 2,995.83 while the Dow’s closing level also ranks as an intraday record.
What drove 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 . /zigman2/quotes/207661132/composite ADP +1.10% , 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.
In other data, two measures of the U.S. services sector reflected some weakness, with the Institute for Supply Management’s nonmanufacturing index falling in June to 55.1%, from 56.9% in May, below economists expectations of 55.9%, per a MarketWatch poll, and the lowest reading in about two years. Markit’s services PMI edged higher to 51.5 in June from a 39-month low of 50.9 in May.
Meanwhile, the Commerce Department reported Wednesday that U.S. factory orders fell in 0.7%, in line with economists expectations.
Investors may be heartened by an easy-money regime sweeping the globe after current International Monetary Fund Managing Director 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.