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U.S. stocks traded slightly higher at midday Wednesday as more data suggested slower economic growth supporting the notion that the Federal Reserve may not raise interest rates further.
How are stocks trading
-
The Dow Jones Industrial Average
DJIA
edged up 57 points, or 0.2% to 34,908 -
The S&P 500
SPX
gained 17 points, or 0.4% to 4,514 -
The Nasdaq Composite
COMP
advanced 72 points, or 0.5% to 14,021
On Tuesday, the Dow Jones Industrial Average rose 293 points, or 0.85%, to 34853, the S&P 500 increased 64 points, or 1.45%, to 4498, and the Nasdaq Composite gained 239 points, or 1.74%, to 13944.
What’s driving markets
Investors were focusing on private sector payroll data released on Wednesday, hoping evidence of a cooling labor market could support an eventual pivot to monetary easing by the Federal Reserve.
Private sector payrolls rose by 177,000 in August, down from a revised 371,000 in the prior month, according to the payroll services firm ADP on Wednesday. Economists polled by The Wall Street Journal had forecast a gain of 200,000 private sector jobs in August.
“While the ADP report does not necessarily enjoy an exceptionally strong positive correlation with the government’s payroll report due on Friday morning, it nonetheless suggests that the overheated jobs market may be cooling—- clearly what the Fed wants to see, as it should bring the labor market into balance,” according to Quincy Krosby, chief global strategist for LPL Financial.
Meanwhile, the U.S. economy grew at a somewhat slower 2.1% annual pace in the second quarter, revised figures show. Gross domestic product was marked down from an initial 2.4%.
Markets are in a mood where any data that may support a Fed pivot leads to an upside push in equities, according to José Torres, senior economist at Interactive Brokers.
The S&P 500 index closed the previous session at a three-week peak after Treasury yields slid sharply in response to signs of a softening labor market and waning consumer confidence.
Still, Torres expects stocks to go lower from here. “August was sluggish, but the S&P 500 is at 4,500, only 2% away from the yearly high.”
“The Fed’s balance sheet is going lower. You are probably going to have one more rate hike from the Fed. Earnings have been all right, but not excellent. And right now we’re trading at around 19 times next year’s earnings – it is very high considering how high rates are,” Torres said in a call. He expects the S&P 500 to finish the year at around 4,300.
In other economic data, the U.S. trade deficit in goods widened 2.6% to $91.2 billion in July, according to the Commerce Department’s advanced estimate released Wednesday. Economists polled by Econoday were looking for the deficit to rise to $90.8 billion deficit.
The main corporate focus on Wednesday is likely to be the results of Salesforce
CRM,
which are due after the closing bell. PC maker HP
HPQ,
offered a cautious outlook late on Tuesday.
Companies in focus
-
HP Inc.
HPQ,
-7.01%
skidded 8% on Wednesday following an earnings report highlighted by a third straight revenue miss and warnings of a challenging economy for the PC and printer maker. HP Chief Executive Enrique Lores warned PC pricing has not “recovered as quickly,” but he said that the availability of AI products in late 2024 should “refresh” consumer and business sales. -
Rivian Automotive Inc.
RIVN,
+1.12%
shares edged up 2% Wednesday after the company said in a filing late Tuesday that its board has approved an increase in its chief executive RJ Scaringe’s annual base salary to $1 million, from $650,000, effective last Friday. -
Box Inc.
BOX,
-9.35%
shares fell 9% after the company on Tuesday reported quarterly results that barely topped analyst revenue and earnings estimates and offered weak guidance.
