Wednesday’s Stock Market Open: US Equities Begin Third Quarter With Gains On Good Private Payroll Data

Update: 12:05 p.m. EDT:

U.S. stocks remained moderately higher as of Wednesday noon, but the Dow had given back most of its earlier gains.

The Dow Jones Industrial Average edged up 1.55 points to 25,814.43, while the S&P 500 rose 11.74 points to 3,112.03 and the Nasdaq Composite Index climbed 65.61 points to 10,124.37.

In Europe markets traded lower, as Britain’s FTSE-100 edged down 0.19%, while France’s CAC-40 slipped 0.18% and Germany’s DAX fell 0.41%.

The Institute for Supply Management said its manufacturing index rose to 52.6% in June from 43.1% in May.

The Commerce Department said U.S. construction spending fell 2.1% in May, following a 3.5% decline in April.

Original story:

U.S. stocks rose on Wednesday on relatively strong private payroll data, while worries over coronavirus persist.

The Dow Jones Industrial Average gained 113.83 points to 25,926.83, while the S&P 500 rose 8.75 points to 3,109.04 and the Nasdaq Composite Index climbed 20.21 points to 10,078.98.

Private payrolls jumped by 2.369 million in June, said ADP and Moody’s Analytics. Payroll data for May was dramatically revised upward to 3.065 million.

“Small business hiring picked up in the month of June,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “As the economy slowly continues to recover, we are seeing a significant rebound in industries that once experienced the greatest job losses.”

FedEx (FDX) soared after reporting better-than-expected earnings and revenue for its fiscal fourth quarter.

The U.S. markets are coming off a historic second quarter in which the Dow gained 17.8% (its best quarter since 1987); while the S&P 500 jumped almost 20% (its best quarter since 1998); and Nasdaq surged 30.6% (its best quarter since 1999).

However, concerns persist over the ongoing covid-19 pandemic. At least 12 states have postponed or scaled back planned reopenings due to rising infections.

“We continue to expect [the recovery] to be an uneven process, albeit with a positive trajectory,” said Keith Lerner, chief market strategist at SunTrust Advisory Services. “The good news is through this digestion period, markets are working off some of the excesses that had built up, and elevated expectations are being reset.”

Katerina Simonetti, senior portfolio manager at UBS Private Wealth Management in Philadelphia, said: “Although we expect some level of recovery in 2021, we don’t think corporate profits will recover to levels reached in 2019 until 2022. In our base case we expect S&P 500 to be trading around 3,300 by December 2020.”

Simonetti noted that the recent increase in the numbers of reported COVID-19 cases has resulted in considerable market uncertainty. “Further market decline cannot be ruled out,” she added.

“We feel like a lot of the good news is priced in,” Jim McDonald, chief investment strategist at Northern Trust. “The market’s got some optimism that we are going to see more of a V-shaped recovery, so there is risk of some modest disappointment.”

Overnight in Asia markets finished mixed, as China’s Shanghai Composite index climbed 1.38% and Japan’s Nikkei-225 slipped 0.75%. Hong Kong’s Hang Seng exchange was closed for a holiday.

In Europe markets traded mixed, as Britain’s FTSE-100 edged up 0.06%, while France’s CAC-40 slipped 0.38% and Germany’s DAX fell 0.43%.

Crude oil futures gained 1.22% at $39.75 per barrel, Brent crude rose 1.21% at $41.77. Gold futures fell 0.71%.

The euro slipped 0.04% at $1.1232 while the pound sterling gained 0.15% at $1.2421.