Stocks were choppy in the first half of Wednesday's session in reaction to a mixed round of economic data. However, the indexes picked up steam around lunchtime on reports the White House plans to relax some of its recently implemented tariffs.
Ahead of the opening bell, ADP said the U.S. added 77,000 private payrolls in February, the fewest since July and well below economists' forecast for 148,000. Job losses were seen across several industries, including transportation, education and healthcare.
"Policy uncertainty and a slowdown in consumer spending might have led to layoffs or a slowdown in hiring last month," says Nela Richardson, chief economist at ADP, adding that data suggest a "hiring hesitancy among employers as they assess the economic climate ahead."
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The ADP report arrived a few days prior to Friday's highly anticipated February jobs report, which is expected to show the addition of 150,000 nonfarm payrolls and the unemployment rate rising to 4.1% from 4.0% in January, says Bill Adams, chief economist at Comerica Bank.
Services sector growth came in strong in February
Also on the economic calendar Wednesday were a pair of readings on the services sector. Both the ISM and S&P Global Services Purchasing Managers Indexes (PMI) came in higher than expected for February – at 54.4% and 51%, respectively.
While the ISM data typically carry more sway, the S&P Global Services PMI was particularly notable this time around because it swung back into expansion territory (a reading above 50) after signaling a contraction in services sector activity in its preliminary reading.
Stocks bounce on tariff talk
The three main indexes were all in negative territory shortly before noon Eastern Standard Time but finished with solid gains on some encouraging tariff headlines.
According to the White House, President Donald Trump will postpone tariffs on Canadian and Mexican auto imports for one month. This came after Trump spoke with leaders from the Big Three automakers – Ford Motor (F, +5.8%), General Motors (GM, +7.2%) and Stellantis (STLA, +9.2%).
At the close, the Dow Jones Industrial Average was up 1.1% at 43,006, the S&P 500 was 1.1% higher at 5,842, and the Nasdaq Composite had added 1.5% to 18,552.
CrowdStrike stumbles after earnings
In single-stock news, CrowdStrike Holdings (CRWD) tumbled 6.3% after the cybersecurity company's weak guidance offset a fiscal fourth-quarter beat.
CRWD forecasts fiscal first-quarter earnings of 64 cents to 66 cents per share, well below the 95 cents in earnings per share Wall Street is calling for, due in part to lingering expenses related to last summer's global IT outage. Its full-year earnings and revenue outlooks also came in below estimates.
Still, Oppenheimer analyst Ittai Kidron maintained an Outperform (Buy) rating on the tech stock after earnings, calling it "one of the strongest platform opportunities in security."
Huntington Ingalls gets a Trump boost
Elsewhere, Huntington Ingalls Industries (HII) showed why it's one of the top stocks to buy for a Trump presidency, with shares spiking 12.4% – their biggest one-day gain ever.
The military shipbuilder's surge came after President Trump said during last night's address to a joint session of Congress that he will create "a new Office of Shipbuilding in the White House and offer special tax incentives to bring this industry home to America, where it belongs."
The industrial stock could certainly use the boost. Even with Wednesday's Trump-inspired pop, it's still down 35% year over year. And Bernstein analyst Douglas Harned says challenges including higher costs, supply chain issues and labor shortages continue to plague shipbuilders.
Harned has a Market Perform (Hold) rating on HII and says he needs to "gain confidence in the margin trajectory" before he can get more positive.
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