Tech firms lead stocks broadly higher; oil slumps
Investors shrug off bleak jobs report
Stocks closed higher on Wall Street for the second straight day Wednesday, extending Tuesday’s strong gains as investors bet an interest rate cut could be ahead.
Technology, industrial and health care companies accounted for much of the broad gains, which were tempered by a slide in energy stocks following a 3.4% plunge in the price of U.S. crude oil.
Traders shrugged off a report showing private U.S. companies added the fewest jobs in nine years last month. The bleak jobs snapshot may have been welcomed by investors hoping that it could help persuade the Federal Reserve to cut interest rates.
“It could help underpin a Fed rate cut,” said Quincy Krosby, chief market strategist at Prudential Financial. “The market has been in essence calling for a rate cut for a number of months as the economic data have waned and tariff issues have intensified.”
The S&P 500 index gained 22.8 points, or 0.8%, to 2,826.15. The benchmark index’s 2.1% gain Tuesday was its best performance since January.
The Dow Jones Industrial Average climbed 207.39 points, or 0.8%, to 25,539.57. The Nasdaq composite rose 48.36 points, or 0.6%, to 7,575.48. The Russell 2000 index of smaller companies slipped 1.77 points, or 0.1%, to 1,506.79.
Major stock indexes in Europe closed broadly higher.
Bond prices rose, pulling down yields on the 10-year Treasury note to 2.12% from 2.13% late Tuesday.
Federal Reserve Chairman Jerome Powell said Tuesday that the central bank was “closely monitoring” developments in the United States’ multiple trade conflicts and would “act as appropriate” to sustain the nation’s economic expansion.
Investors now expect the central bank to cut rates at least once and possibly twice before year’s end, in part because of fallout from the trade war.
Stocks slumped in May as investors grew anxious over the trade disputes. An escalating trade war between the U.S. and China and the added threat of a new trade war with Mexico sent investors fleeing to safer holdings, like bonds.
The U.S. and Mexico were holding trade talks in Washington late Wednesday afternoon. A 5% tariff on imports from Mexico, which could affect U.S. companies making everything from cars to beer and tacos, is due to go into effect on Monday, barring an agreement between the two countries.
The Trump administration is demanding that Mexico step up efforts to halt Central American migrants from making their way to the U.S.
Oil prices slumped following a report showing an unexpected surge in U.S. crude supplies.
Benchmark U.S. crude settled at $51.68 a barrel. Brent crude oil, the international standard, closed 2.2% lower at $60.63 a barrel.
U.S. crude has fallen in five of the past six weeks amid signs that China’s economic growth is slowing. It’s now 22.1% below its 2019 closing high of $66.30 in April. The slide puts U.S. crude in what Wall Street calls a bear market.
Occidental Petroleum dropped 4.6% and Halliburton slid 3.5%.
Technology companies were among the most notable gainers Wednesday. Apple rose 1.6% and Microsoft added 2.2%. Salesforce climbed 5.1% after blowing away profit forecasts.
Traders also snapped up health care stocks. Boston Scientific gained 2.5% and Medtronic rose 2.3%.
Industrial stocks rose broadly, with notable gains by airlines as fuel costs fell. American Airlines Group gained 4.3% and Southwest Airlines rose 2.6%.