Wall Street rises as weak ADP jobs data bolsters rate-cut bets
(Reuters) – U.S. stocks gained on Wednesday after data showed that the private sector added fewest jobs in May since 2010, raising the odds that the Federal Reserve would cut interest rates to counter a potential slowdown.
FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., June 4, 2019. REUTERS/Brendan McDermid
Private-sector jobs rose by 27,000 last month, according to the ADP National Employment Report, much below expectations of a 180,000 increase.
The data, which comes ahead of a more comprehensive nonfarm payrolls from the Labor Department due on Friday, increased the likelihood that the U.S. central bank would cut interest rates by at least 75 basis points through December.
“The ADP number does raise some concerns about the further impact of tariffs. It adds to the case of interest rate cuts, the odds of that happening are going up,” said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.
Interest-rate sensitive banking stocks slipped 0.88%, while the broader financial sector fell 0.31%.
The report comes a day after Fed Chairman Jerome Powell said the central bank would respond “as appropriate” to risks posed by a global trade war, adding to expectations after dovish remarks from St. Louis Federal Reserve President James Bullard.
The escalation in the trade dispute between the United States and China last month has triggered worries of a global economic slowdown and has put the benchmark S&P 500 index 5% away from its record high of 2,954.13 hit on May 1.
The technology sector, among the hardest hit by the sharp rise in trade tensions, rose 1.36% and boosted markets. The sector was supported by near 2% gains in Apple Inc and Microsoft Corp.
At 9:39 a.m. ET, the Dow Jones Industrial Average was up 134.04 points, or 0.53%, at 25,466.22. The S&P 500 was up 13.50 points, or 0.48%, at 2,816.77 and the Nasdaq Composite was up 50.74 points, or 0.67%, at 7,577.86.
The energy sector slipped 0.52%, and was the only other S&P sector trading lower, as crude prices declined on higher U.S. inventories.
Among other stocks, Salesforce.com Inc rose 3.95% after its quarterly revenue and profit beat analysts’ estimates and the company forecast full-year results above expectations.
Campbell Soup Co jumped 6.5%, the most on the S&P index, after the food company raised its full-year profit forecast after better-than-expected quarterly earnings.
Advancing issues outnumbered decliners by a 1.77-to-1 ratio on the NYSE and by a 1.53-to-1 ratio on the Nasdaq.
The S&P index recorded 28 new 52-week highs and one new low, while the Nasdaq recorded 29 new highs and 12 new lows.
Reporting by Medha Singh and Amy Caren Daniel in Bengaluru; Editing by Sriraj Kalluvila