Agencies
New York
US stock indexes edged higher on Wednesday in a holiday-shortened trading session, as data pointing to a softening economy raised hopes for a September start to the Federal Reserve’s policy easing.
The equity market will close early on Wednesday and stay shut on Thursday on account of US Independence Day, keeping trading volumes thin throughout the week.
Both the ADP Employment report and weekly jobless claims data pointed to easing labor market conditions, a welcome signal ahead of Friday’s closely watched non-farm payrolls report. Markets hope signs of weakness in the labor market will boost chances of the Fed cutting interest rates.
“It’s quite a strong unemployment claims number, and it’s fitting in with an overall trend that’s probably an indication of loosening up in the jobs market. It must be quite welcoming for the Fed,” said David Morrison, Trade Nation senior market analyst.
Additionally, PMI data from the Institute for Supply Management was weaker than expected, and factory orders unexpectedly slumped, strengthening the case for easing policy.
Wednesday’s data prompted market participants to boost bets of a September rate cut to over 70 percent as per LSEG’s FedWatch.
The Fed’s June meeting minutes are due later in the day.
Tesla jumped 3.9 percent, trading at a near six-month high after a more than 10 percent gain on Tuesday following a smaller-than-expected drop in second-quarter vehicle deliveries.
The Philadelphia SE Semiconductor Index rose 0.5 percent, helped by gains in the US listing of Taiwan Semiconductor Manufacturing and Broadcom which rose 2 percent and 1.8 percent.
However, megacaps Nvidia, Alphabet, Microsoft, and Amazon.com slipped between 0.1 percent and 1 percent.
On the other hand, an index of smallcap stocks was 0.4 percent higher, while the economically sensitive materials and utilities S&P 500 subsectors were up 0.9 percent and 1.1 percent.
“The tendency at the moment is towards rotation ... we have quite a few days where we see the Russell down, and tech up and vice versa,” Morrison said, though noting that the market’s optimism around megacap tech stocks was still strong.
As the S&P 500 has jumped over 15 percent in the first half of 2024, largely supported by top-tier high momentum technology-related stocks, the benchmark index’s equal-weighted counterpart only rose 5 percent and small and mid-cap stocks have significantly lagged.
