S&P 500 shares soared near record highs on Wednesday as U.S. private wages rose in June, even as employment declined, with Wall Street’s largest average set to end their fifth straight quarter gains.
ADP’s national employment report showed that the private payroll rose by 692,000 jobs this month, down from 886,000 additions in May as companies climbed for workers to meet a rise in demand amid a rapidly reopening economy.
The Labor Department’s more comprehensive and closely monitored employment data for June are expected on Friday, and market participants fear a strong reading could force the US Federal Reserve to parry its ultra-loose monetary policy.
The monthly Bureau of Labor Statistics report has been disappointing over the past two months. A third disappointment would cement the fact that economic gains are beginning to lose momentum, ”said John Brady, senior vice president at RJ O’Brien & Associates in Chicago.
The prospect of a temporary rise in inflation has pushed the benchmark S&P 500 and Nasdaq to record highs in recent sessions, helped by a comeback in technologically heavy growth stocks.
The S&P growth index, which houses mega-cap names Apple Inc, Amazon, Facebook Inc and Microsoft Corp, has risen nearly 11.9% this quarter, better than its value peer, narrowing the gap for year-to-date performance .
The S&P 500 has risen by around 14.3% in the first half of the year and is set for the second-best performance in the first half since 1998, with stocks in energy, finance, real estate and communications services chopping up the best performance at the sector level.
“The second half of the year could certainly lead to an increase in volatility depending on what Fed policy does. Tightens the Fed? Is inflation going higher? Said Brady.
9:55 AM ET Dow Jones Industrial Average averaged 52.81 points or 0.15% at 34,345.10, S&P 500 fell 0.83 points or 0.02% at 4,290.97 and Nasdaq Composite fell 26.06 points or 0 .18% at 14,502.28.
Six of the 11 major S&P indices rose with energy leading the pact higher and tracking oil prices.
Micron Technology rose 1.1% as the BMO upgraded the stock to “surpass” from “market performers” by continuing an imbalance between supply and demand in 2022. The chip maker is expected to have a quarterly result when markets close.
Virgin Galactic Holdings fell 4.6% after BofA Global Research downgraded billionaire Richard Branson’s spaceship company to “underperformance” from “buy”.
Declining issues exceeded the number of researchers for a 1-to-1 ratio on the NYSE and for a 1.66-to-1 ratio on the Nasdaq.
The S&P index recorded 13 new 52-week highs and no new lows, while the Nasdaq recorded 28 new highs and 21 new lows.
(Reporting by Devik Jain and Medha Singh in Bengaluru; editing by Maju Samuel and Arun Koyyur)