Stocks caught a tailwind Wednesday as more signs of a cooling labor market boosted market participants' expectations for an earlier-than-expected rate cut from the Federal Reserve. Traders and investors also digested another batch of quarterly earnings and more fresh economic data.
Starting with econ news. The next jobs report lands at the end of the week, but a bad-news-is-good-news reading on the labor market helped lift equities on Wednesday. The private sector added 152,000 jobs last month, according to ADP (ADP), a marked slowdown from the 188,000 hires made in April. Economists were looking for the ADP survey to show the addition of 175,000 jobs last month.
The ADP report "is too unreliable to take seriously," notes Ian Shepherdson, chairman and chief economist at Pantheon Macroeconomics, but it is consistent with his firm's prediction for hiring to slow in the months ahead. "We're sticking with our Homebase model forecast for May of approximately 150,000 and continue to brace for a run of sub-100,000 payroll prints over the summer months," the economist writes.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The ADP data follow yesterday's report that job openings fell to a three-year low of 8.1 million in April, below the 8.35 million economists were expecting. Signs the red-hot labor market is cooling lifted expectations for the Federal Reserve to enact its first quarter-point rate cut in September. According to CME Group's FedWatch Tool, the probability of a September rate reduction rose to 59% from 56% a day ago.
In other econ developments, rate-cut expectations were tempered somewhat by a more encouraging reading on the U.S. services sector. Economic activity in the sector grew in May after contracting in April for the first time since December 2022, said the Institute for Supply Management's Services ISM Report On Business.
"The increase in May is a result of notably higher business activity, faster new orders growth, slower supplier deliveries, and despite the continued contraction in employment," Anthony Nieves, chair of the ISM Services Business Survey Committee, said in a media release.
Stocks making moves
In single-stock news, Hewlett Packard Enterprise (HPE) stock rose nearly 11% after the technology company beat top- and bottom-line expectations for its fiscal second quarter and issued a strong outlook thanks to solid demand for its artificial intelligence (AI) servers.
CrowdStrike Holdings (CRWD, +12%) stock was another Wednesday winner following a strong quarterly earnings report. The cybersecurity company not only beat top- and bottom-line expectations for its fiscal first quarter, but CrowdStrike also lifted its full-year forecast. CRWD's upside following a beat-and-raise report is just more of the same for the cybersecurity stock. Indeed, CrowdStrike has been a big winner so far in 2024, rising more than 25% for the year to date through early June.
If a Dollar Tree falls in the forest
Shares in Dollar Tree (DLTR) sold off after the retail chain announced a strategic review of its Family Dollar business, which could include a sale. The move comes less than three months after the company announced it would close 970 underperforming Family Dollar stores.
"A consumer pullback has only exacerbated Dollar Tree's losing battle to competitors such as Walmart and Dollar General," writes Christine Short, vice president of research, at The Short List. "The Family Dollar brand has been the culprit of poor overall results for the last several quarters."
DLTR stock lost 4.9% on the session, making it the second-worst performing issue in the S&P 500 on Wednesday.
As for the main indexes, the broader S&P 500 rose 1.2% to 5,354, while the tech-heavy Nasdaq Composite added nearly 2% to 17,187. The blue chip Dow Jones Industrial Average rose 0.3% to 38,807.
Related content
- All 30 Dow Jones Stocks Ranked: The Pros Weigh In
- Best Dividend Stocks to Buy for Dependable Dividend Growth
- Is Investing In Gold Worth It? How Gold Prices Have Changed
-
Investing Abroad Could Pay Off — Here's HowCountries overseas are stimulating their economies, and their stocks are compelling bargains.
-
Retire in Belize for Stunning Natural Beauty and CultureBelize offers miles of protected land and ocean, a rich mix of cultures and a chill lifestyle. Best yet — the income requirement is just $2K per month.
-
Why Investing Abroad Could Pay Off
Countries overseas are stimulating their economies, and their stocks are compelling bargains.
-
Are These the Next Stocks to Split?Interactive Brokers' recently split its stock to makes its shares more accessible to investors. Could these high-priced stocks be next?
-
Your Home + Your IRA = Your Long-Term Care SolutionIf you're worried that long-term care costs will drain your retirement savings, consider a personalized retirement plan that could solve your problem.
-
I'm a Financial Planner: Retirees Should Never Do These Four Things in a RecessionRecessions are scary business, especially for retirees. They can scare even the most prepared folks into making bad moves — like these.
-
A Retirement Planner's Advice for Taking the Guesswork Out of Income PlanningOnce you've saved for retirement, you'll need your nest egg to support you for as many as 30 years. For that, you need a clear income strategy, not guesswork.
-
Stock Market Today: Stocks Swing as Trump Scraps Canada Trade TalksDespite a mid-afternoon slip, the S&P 500 and Nasdaq ended the day at new record highs.
-
Why Smart Retirees Are Ditching Traditional Financial PlansFinancial plans based purely on growth, like the 60/40 portfolio, are built for a different era. Today’s retirees need plans based on real-life risks and goals and that feature these four elements.
-
To My Small Business: Well, I've Been Afraid of Changin', 'Cause I've Built My Life Around YouWhile thinking about succession planning might feel like anticipating a landslide (here's to you, Fleetwood Mac), there are strategies you can implement to manage the uncertainty and the transition.
