The S&P 500 and the Nasdaq have edged up as investors strengthened bets for an earlier than expected start to the Federal Reserve’s easing cycle after multiple reports signalled a weakening labour market and slowing growth in the US economy.
Megacaps such as Nvidia, Microsoft and Amazon.com gained between 0.3 per cent and 2.5 per cent while the Philadelphia SE Semiconductor Index added 2.2 per cent.
Tech stocks gained 1.1 per cent, leading sectoral advances.
However, the majority of other S&P 500 sectors declined.
US Treasury yields initially slipped to two-month lows after the ADP National Employment report showed private employers increased their headcounts by 152,000 in April, significantly lower than forecast.
Traders expect nearly 48 basis points of easing this year, according to the LSEG rate probabilities app.
Expectations for a September rate reduction are now at nearly 69 per cent, versus below 50 per cent last week, according to the CME’s FedWatch tool.
Separately, an Institute of Supply Management survey showed services sector activity stood at 53.8 in May, better than the expectation of 50.8.
With major indexes near all-time highs, investors are juggling worries of a weakening economy with hopes this would lead to an earlier start to the Fed’s rate cuts than previously expected.
“The odds of recession have increased just from the data that we’ve seen … the economy has tricked us and been more resilient than people expect but at some point it’s going to falter,” said Thomas Martin, vice president and senior portfolio manager at Globalt Investments.
However, “there’s a lot of desire to participate and to not miss out on a summer rally,” he added.
Investors now await the non-farm payrolls report, due on Friday, for a comprehensive evaluation of the labour market.
In early trading on Wednesday, the Dow Jones Industrial Average was down 103.18 points, or 0.27 per cent, at 38,608.11, the S&P 500 was up 12.94 points, or 0.24 per cent, at 5,304.28, and the Nasdaq Composite was up 123.07 points, or 0.73 per cent, at 16,980.11.
Losses in economically sensitive consumer discretionary stocks were the biggest drags on the Dow.
Hewlett Packard Enterprise topped the benchmark index with a 13.8 per cent rise after forecasting third-quarter revenue above Street expectations, helped by upbeat demand for its AI servers.
Dollar Tree reversed earlier gains, slipping 2.2 per cent after a disappointing quarterly profit forecast.
The budget retailer said it would explore options that include a potential sale or spin-off of Family Dollar.
Intel gained 1.4 per cent after buy-out firm Apollo Global Management agreed to purchase a 49 per cent equity interest for $US11 billion ($A17 billion) in a joint venture related to the chipmaker’s Ireland manufacturing unit.
CrowdStrike Holdings jumped 4.2 per cent after forecasting second-quarter revenue above estimates when markets closed on Tuesday, helped by strong demand for its cybersecurity offerings.
Advancing issues outnumbered decliners by a 1.15-to-1 ratio on the NYSE, and by a 1.09-to-1 ratio on the Nasdaq.
The S&P index recorded 11 new 52-week highs and six new lows, while the Nasdaq recorded 29 new highs and 57 new lows.
