Stocks rallied on Wednesday, with benchmarks notching four consecutive days of gains, as investors bet on more U.S cities planning to reopen businesses in the near-term as the coronavirus pandemic eased.
The S&P 500 rose for a fourth straight session, its longest winning streak since early February, and closed at its highest level since March 4. A double-digit percentage advance in shares of Boeing (BA) powered the Dow higher by more than 2%, or 527 points, by Wednesday’s close. The Nasdaq advanced by about 0.8%.
Despite the rally, more dour economic figures underscored the damage wrought by the COVID-19 crisis, with U.S. employers shaving off nearly 2.8 million private payrolls in May, according to a report Wednesday from ADP. It sets the stage for Friday’s nonfarm payrolls report, which analysts expect to show another surge in the unemployment rate.
However, markets shrugged off the data, which as the data beat consensus expectations by a mile. On average, Wall Street economists expected private sector job losses to total 9 million for the month, according to a Bloomberg survey.
“The ADP report isn't always a reliable predictor of the [nonfarm payrolls] data, but it suggests that the pace of job loss moderated noticeably between April and May, even though it remained substantial relative to pre-COVID-19 norms,” JPMorgan Chase economist Daniel Silver wrote in a note on Wednesday.
“This is a message broadly consistent with some other related signals, and the labor market likely has benefitted from the easing of restrictions on activity in many places in recent weeks,” he added.
Equities in Europe and Asia also rose after a survey from Caixin/IHS Markit showed China’s services sector purchasing managers’ index (PMI) jumped to 55.0 in May, the highest since October 2010. Meanwhile, crude oil prices held at a three-month high of more than $36 per barrel, after a Bloomberg report cast some doubt over the likelihood of OPEC and its allies agreeing to extend oil production cuts this month.
Market participants largely looked past ongoing protests, looting and unrest that has taken place over multiple days in major metropolitan areas across the country.
Some health professionals, however, voiced concerns that mass gatherings could exacerbate the spread of the coronavirus. Still, the most recent data on new case growth has held in-line with recent trends so far, with confirmed cases in the U.S. rising 1.2% to 1.82 million between Tuesday and Wednesday afternoon, or about in-line with the seven-day trend, according to Bloomberg-compiled data.
Multiple cities extended curfews as officials tried to implement measures to curb instances of violence, but most still intend to proceed with easing lockdowns. New York City, which has seen crowds gather over the past five days, extended its curfew through Sunday and moved up the start time to 8 p.m., after initially instating a curfew Monday evening.
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4:03 p.m. ET: S&P closes at highest since March 4
Here were the main moves in markets as of 4:03 p.m. ET:
Gold (GC=F): -$34.40 (-1.98%) to $1,699.60 per ounce
10-year Treasury (^TNX): +8.1 bps to yield 0.7610%
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2:45 p.m. ET: Domestic crude oil prices settle 1.3% higher to more than $37 per barrel
Front contracts for U.S. West Texas intermediate (CL=F) settled higher by 1.3%, or 48 cents, to $37.29 per barrel on Wednesday. This marked the second straight session of gains for the commodity, sending prices to a fresh 12-week high.
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12:41 p.m. ET: Stocks extend gains as session rolls on, led by Financials
Stocks added to gains Wednesday afternoon, with the Financials and Industrials sectors leading the way higher in the S&P 500. Boeing and American Express led advances in the Dow, with the former up more than 8%.
Here were the main moves in markets, as of 12:41 p.m. ET:
S&P 500 (^GSPC): +35.57 points (+1.15%) to 3,116.39
The pricing of Warner Music Group’s IPO was delayed by a day to observe the music industry’s Blackout Tuesday, a day meant to pay tribute to George Floyd and protest policy brutality and racism.
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10:01 a.m. ET: US services sector activity improves in May, but still holds in contraction
The Institute for Supply Management’s non-manufacturing purchasing managers’ index (PMI) rose to 45.4 in May from 41.8 in April, beating consensus estimates for a print of 44.4.
The headline PMI figure still held below the neutral level of 50.0, however, indicating contraction in the U.S. services sector.
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9:31 a.m. ET: Stocks open higher
Here were the main moves in markets, as of 9:32 a.m. ET:
S&P 500 (^GSPC): +21.97 points (+0.71%) to 3,102.79
8:30 a.m. ET: Dunkin’ is making the donuts, and people are buying them again
A motorist reaches to the jar to leave a tip for workers at a drive-thru window of a Dunkin Donuts as a stay-at-home order reamins in force for residents while still dealing with the dangers of the new coronavirus Tuesday, April 28, 2020, in Denver. (AP Photo/David Zalubowski)
The Donut indicator? In a regulatory filing, Dunkin’ Donuts underscored the market’s growing optimism over a recovery, noting that comparable store sales have shown “significant sequential improvement” in the last few weeks:
Dunkin’ U.S. comparable store sales have been improving week-over-week during the second quarter. As of the week ended May 23, 2020, quarter-to-date comparable store sales declines were approximately 23 percent for open stores. During the week ended May 23, 2020, comparable store sales declined 15 percent for open stores, representing a significant sequential improvement over the decline of 25 percent for the week ended April 25, 2020, as reported on the Company's first quarter earnings call on April 30, 2020.
The coffee giant attributed the rise to a boost from drive-thru locations; brisk traffic during 11 a.m to 2 p.m. and higher ticket orders; and more mobile app usage that facilitates deliveries and curbside pick-ups.
Dunkin’s stock (DNKN) rose over 1% in pre-market action, in line with a broader market that was poised to jump at the opening bell.
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8:20 a.m. ET Stocks remain in the green after grim ADP data
The U.S. economy lost an additional 2.76 million jobs last month, according to ADP’s May private payrolls data. However, traders continue to bid up stocks decisively with the focus remaining on the economy’s slow recovery from coronavirus lockdowns.
Here were the main moves in markets, as of 8:20 a.m. ET:
7:01 a.m. ET Wednesday: Home purchase applications rise for seventh straight week
An index tracking mortgage applications for home purchases rose 5% over last week for the week ending May 29, seasonally adjusted, the Mortgage Bankers Association said in its weekly report Wednesday.
This marked the seventh straight advance for the index in a protracted rebound from early April, when the coronavirus pandemic and social distancing measures were at their peak and led to a slump in housing market activity. The unadjusted index for purchases also rose 19% versus the same week last year.
“The pent-up demand from homebuyers returning to the market continues to support a recovery from the weekly declines observed earlier this spring,” Joel Kan, MBA’s associate vice president of economic and industry forecasting, said in a statement. “However, there are still many households affected by the widespread job losses and current economic downturn. High unemployment and low housing supply may restrain a more meaningful rebound in purchase applications in the coming months.”
Applications for refinances, however, fell 9% from the previous week for a seventh straight week of declines.
“After reaching a peak of 76 percent earlier this year, refinances now account for less than 60 percent of activity, and the index is now at its lowest level since February 21,” Kan said.
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6:06 p.m. ET Tuesday: Stock futures open little changed
Here were the main moves at the start of the overnight session for U.S. equity futures, as of 6:06 p.m. ET:
S&P 500 futures (ES=F): 3,078.75, up 1.75 points (+0.06%)
Dow futures (YM=F): 25,699.00, down 2 points (-0.01%)
Nasdaq futures (NQ=F): 9,654.25, up 6.5 points (+0.07%)
Protesters demonstrate on June 2, 2020, during a "Black Lives Matter" protest in New York City. - Anti-racism protests have put several US cities under curfew to suppress rioting, following the death of George Floyd while in police custody. (Photo by Johannes EISELE / AFP) (Photo by JOHANNES EISELE/AFP via Getty Images)
