Stocks gapped higher on Wednesday, propelled by better-than-expected ADP data, leading to continued positive projections for recovery from coronavirus shuttering.
The Dow Jones Industrial Average popped 425 points, or 1.7%, while the S&P 500 added 1.2%, bringing its rally from its pandemic low in March to over 40%. Meanwhile, the Nasdaq Composite gained 0.7%, while the Dow is looking to score a third consecutive day of gains.
ADP and Moody’s Analytics reported private payrolls dropped by another 2.76 million in May. But the ADP number was much better than the expected 8.75M estimate. Data from the Institute for Supply Management revealed that the U.S. services sector slowed less than projected as well, rebounding from an 11-year trough.
“Equities are off to a very good start in June,” said Gregory Faranello, head of U.S. rates trading at AmeriVet Securities, in a note. “Looking past some clear roadblocks, risk assets continue to move forward off the back of brighter days, reopening the economy and trillions in liquidity.”
While looting and riots plagued New York City Monday night, where the largest Macy’s store in the nation was vandalized, as protesters got out of control, overwhelming police, investors seem focused on the country reopening, driving stocks higher say experts.
“Despite several issues of importance — national riots, Chinese relations, an ongoing pandemic — the stock market is primarily focused on a single thing: the restart of the U.S. and global economic activities,” Jim Paulsen, chief investment strategist at the Leuthold Group, told CNBC.
“The broader stock market (i.e., small cap stocks, cyclical sectors, international stock markets, and emerging stock markets) is increasingly participating more pronouncedly in this rally suggesting the recession is ending,” Paulsen added.
The Fed stimulus seems to continue to drive markets higher as well, say analysts.
“I think this rally has further to go. It has all those doubters there but it’s the liquidity that the Fed provided that I think is the prime determinant,” Siegel said on CNBC’s “Closing Bell.”
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