Stocks rose Wednesday, following Wall Street's biggest single-day gains in at least five months during the previous session, as investors were bolstered by a potential interest rate cut from the Federal Reserve. Gains were tempered, however, by a weak U.S. private payrolls report and falling oil prices.
The Dow Jones Industrial Average, which rose as much as 212 points, ended up 207 points, or 0.82%, to 25,539. The S&P 500 rose 0.82%. The Nasdaq gained 0.64%.
Federal Reserve Chairman Jerome Powell's comments during a central bank symposium in Chicago Tuesday sparked the two-day rally, although investors had been primed earlier in the week when his colleague, St. Louis Fed President James Bullard, spoke of a "darkened" global trade outlook and hinted at a policy move in response.
A report by the payroll firm Automatic Data Processing found that private employers added jobs in May at the slowest pace in nearly a decade adding fuel to the rate-cut case ahead of Friday's key non-farm payrolls report. The ADP report found employers added a net 27,000 jobs during the month, while economists had forecast a gain of 185,000 jobs.
"Given the strength we've seen in the job market this may raise more than a few eyebrows and adds to the already significant pressure the Fed is feeling to cut rates," said Mike Loewengart, vice president of investment strategy at E*Trade. "It's the lowest level we've seen in the past five years and a far departure from the gangbuster ADP reports we've been used to. That said, one data point does not a trend make, so it will be critical to see how this private data stacks up to the public sector to determine if this is a signal about the health of our economy, or an outlier."
David Madden, a market analyst at CMC Markets UK, said "equity markets are higher as the feel-good factor from (Tuesday) is still doing the rounds, but the optimism might wane a little."
"The ADP employment report showed that a pitiful 27,000 jobs were added in May, which was well below the 180,000 forecast," he said. "The tepid report comes at a time when there are fears the US economy is cooling and there has been increased chatter about an interest rate cut towards the back end of the year. It wasn't all bad news, as the ISM non-manufacturing reading was 56.9, which topped the 55.5 forecast."
President Trump on Tuesday reiterated his threat of imposing a 5% tariff on Mexican imports by June 10, despite opposition from some Senate Republicans. Mexican officials are meeting with Vice President Mike Pence in hopes of proving their country has done enough to stem immigration.
White House trade adviser Peter Navarro urged Mexico to do more and told CNN that "we believe that these tariffs may not have to go into effect precisely because we have the Mexicans' attention."
"Let's stay calm and look at the chessboard here," he said.
"The most important thing is for the Mexican government to take the asylum seekers," Navarro said in an interview Wednesday on Bloomberg TV. "The Mexican government can also boost security along its southern border with Guatemala, as well as crack down with more checkpoints and other measures on the buses and trains that are ferrying migrants."
Oil prices were tumbling Wednesday, with West Texas Intermediate crude down 3.2% to $51.76 a barrel. Government data revealed a surge in domestic stockpiles.
Matt Smith, director of commodity research at ClipperData, said "crude inventories are now at their highest since July 2017, up nearly 44 million barrels since mid-March."
Salesforce.com (CRM - Get Report) climbed 5% to $158.44 after the business-software company beat analysts' fiscal first-quarter earnings expectations and raised its fiscal-year outlook. Salesforce.com is Real Money's Stock of the Day.
Salesforce CEO Benioff 'All In' on Big Tech Crackdown as Lawmakers Plan HearingsApple (AAPL - Get Report) rose after CEO Tim Cook told CBS News he didn't think the tech giant would be targeted by China should the ongoing trade war between Washington and Beijing seep further into the tech sector. Shares climbed 1.6% to $182.54.
GameStop (GME - Get Report) shares plummeted 36% to $5.04 after the video game retailer posted weaker-than-expected first quarter sales and scrapped its regular dividend.
Shares of Campbell Soup (CPB - Get Report) jumped 10% to $41.93 after the company posted stronger-than-expected third-quarter earnings and boosted its full-year profit outlook.
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