The Nasdaq and the S&P 500 are inching up after a services activity survey allayed some fears of a slowdown in economic activity, while focus continues to be on the Federal Reserve’s interest rate cut that is expected later this month.
An Institute for Supply Management survey on Thursday showed services sector activity, a large part of the US economy, rose to 51.5 in August, above expectations of 51.1.
Aiding sentiment, the number of Americans filing new applications for jobless benefits declined last week, according to a Labor Department report.
On the flip side, ADP National Employment data showed private employers hired the fewest number of workers in three-and-a-half years in August, ahead of Friday’s crucial nonfarm payrolls figure.
Traders’ bets for a 25-basis point reduction in interest rates at the Fed’s September meeting now stand at 55 per cent, according to the CME Group’s FedWatch Tool. Bets for a larger 50-bps cut rose to 45 per cent from 34 per cent a week earlier.
“The one positive you could take away is that layoffs seem to remain somewhat muted. If you look at initial claims data, hiring has fallen off of a cliff,” Ross Mayfield, investment strategist at Baird, said.
In early trading on Thursday, the Dow Jones Industrial Average fell 12.19 points, or 0.03 per cent, to 40,962.78, the S&P 500 gained 15.33 points, or 0.28 per cent, to 5,535.40 and the Nasdaq Composite gained 141.92 points, or 0.83 per cent, to 17,226.22.
The tech-heavy Nasdaq outperformed, led by Nvidia that rose 2.5 per cent after the AI chip firm fell more than 11 per cent in the previous two sessions.
Other megacap stocks also rebounded, with Amazon.com rising 3.2 per cent, while Apple and Alphabet added more than 1.2 per cent each.
September has been historically weak for US equities, with the benchmark S&P 500 down about 1.2 per cent for the month on average since 1928. The index is down more than two per cent so far this week and tech stocks have fallen over three per cent.
Six of the 11 S&P 500 sectors traded higher. Consumer discretionary stocks rose 1.9 per cent, with Tesla among the top boosts.
The electric-vehicle maker’s shares jumped six per cent after it said it will launch the full self-driving advanced driver assistance software in the first quarter next year in Europe and China, pending regulatory approval.
C3.ai tumbled 11 per cent after the AI software firm missed quarterly subscription revenue estimates.
Frontier Communications dropped nine per cent after Verizon said it would buy the company in an all-cash deal worth $US20 billion ($A30 billion).
JetBlue Airways jumped 8.2 per cent after the carrier raised its third-quarter revenue forecast.
Leading up to the US presidential elections, Goldman Sachs analysts said Democratic presidential candidate Kamala Harris’ proposed corporate tax hike could lower earnings for companies on the S&P 500 index by about five per cent, while Republican candidate Donald Trump’s proposed relief would boost earnings by about four per cent.
Advancing issues outnumbered decliners for a 1.78-to-1 ratio on the NYSE and a 1.48-to-1 ratio on the Nasdaq.
The S&P 500 posted 35 new 52-week highs and seven new lows, while the Nasdaq Composite recorded 23 new highs and 56 new lows.
https://thewest.com.au/business/markets/wall-st-boosted-by-services-activity-data-c-15959172
