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.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free 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
-
Are COVID Shots Still Covered By Medicare?Getting the new COVID-19 vaccine covered by Medicare isn't as easy this year as it was in the past. Here's what you need to know before you take a trip to your pharmacy.
-
How Digital Platforms Are Changing the Way You Invest in GoldInvesting in gold is easier than ever thanks to digital platforms. Learn how online tools are lowering costs, increasing transparency and making gold accessible to all investors.
-
How Digital Platforms Are Changing the Way You Invest in Gold
Investing in gold is easier than ever thanks to digital platforms. Learn how online tools are lowering costs, increasing transparency and making gold accessible to all investors.
-
Stocks Rise to Start Fed Week: Stock Market TodayThe Nasdaq Composite and S&P 500 hit new record closing highs as Wall Street awaits the Fed's next rate cut.
-
Don't Disinherit Your Grandchildren: The Hidden Risks of Retirement Account Beneficiary FormsStandard retirement account beneficiary forms may not be flexible enough to ensure your money passes to family members according to your wishes. Naming a trust as the contingent beneficiary can help avoid these issues. Here's how.
-
This Is How Life Insurance Can Fund Your Dreams NowBeyond a death benefit, life insurance can provide significant financial value and flexibility through 'living benefits' while you are still alive, helping with expenses like education, business ventures or retirement.
-
Potential Trouble for Retirees: A Wealth Adviser's Guide to the OBBB's Impact on RetirementWhile some provisions might help, others could push you into a higher tax bracket and raise your costs. Be strategic about Roth conversions, charitable donations, estate tax plans and health care expenditures.
-
One Small Step for Your Money, One Giant Leap for RetirementSaving enough for retirement can sound as daunting as walking on the moon. But what would your future look like if you took one small step toward it this year?
-
This Is What You Really Need to Know About Medicare, From a Financial ExpertHealth care costs are a significant retirement expense, and Medicare offers essential but complex coverage that requires careful planning. Here's how to navigate Medicare's various parts, enrollment periods and income-based costs.
-
I'm a Financial Planner: Could Partial Retirement Be the Right Move for You?Many Americans close to retirement are questioning whether they should take the full leap into retirement or continue to work part-time.
