Equities End Higher as Payroll Data Boosts Hope Fed Will Cut Rates

Stocks ended broadly higher on Wednesday as private payrolls rose less than expected in May, bolstering investors’ hopes that the Federal Reserve will cut interest rates.

The ADP National Employment Report said payrolls rose 27,000 last month, below the Street’s expectations for a print of 175,000, while April’s total was revised down by 4,000 to 275,000. May’s result was the lowest since a contraction was reported in March 2010.

The data came a day after Fed Chair Jerome Powell said the central bank would “act as appropriate to sustain the expansion.”

Meanwhile, investor sentiment was also boosted after President Donald Trump said he thinks Mexico wants to reach a deal to avert his plan to impose tariffs on goods from that country to force it to stop illegal migration into the US. Mexican officials were to meet with Vice President Mike Pence Wednesday afternoon.

Ten of the 11 Standard & Poor’s 500 sectors posted gains.

Gains in Dow components Cisco (CSCO), Microsoft (MSFT) and Apple (AAPL) pushed tech shares up nearly 1.4%. Cisco added 2.9% while Microsoft rose 2.2%. Apple firmed 1.6%

Consumer staples gained more than 1.1%. Blue-chips Procter & Gamble (PG) rose 2% while Walmart (WMT) added 1.8%. Campbell Soup (CPB) jumped 10% after it raised its full-year guidance after posting better-than-expected quarterly results.

Falling oil prices pulled energy shares down nearly 1.1% after government data showed a bigger-than-expected increase in US inventories last week. West Texas Intermediate crude oil futures fell more than 3.4% to $51.65 a barrel while international benchmark Brent crude oil futures slid more than 2.3%.

Cimarex Energy (XEC) dropped 5.4% while Occidental Petroleum (OXY) lost 4.5%.

In other news, economic activity expanded at a modest pace from April into mid-May, slightly improving over the previous period as almost all of the Federal Reserve’s districts reported some amount of growth while some noted slowing activity in manufacturing.

Meanwhile, data from the Institute for Supply Management showed that the services sector in the US grew faster than expected last month.

The Dow Jones Industrial Average and S&P 500 each rose 0.8% while the Nasdaq Composite added more than 0.6%.

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