In order to give market participants a head start on Fourth of July festivities, U.S. markets had a half day today, but the shortened trading session still gave the major benchmarks enough time to post some decent pre-holiday gains.
With investors focusing on the potential for Federal Reserve interest rate cuts, a concerning economic data point was overlooked. Or was it? The ADP private payroll survey, which excludes local and federal government hiring, showed the addition of 102,000 private sector jobs last month, well below expectations of 135,000.
The June jobs report is due out Friday, with economists expecting the addition of 165,000 jobs. In May, the U.S. economy added a disappointing 75,000 jobs. On the other hand, if jobs numbers and other marquee data points remain sluggish, the Fed could be compelled to act and lower interest rates, which would benefit riskier assets.
With that line of thinking in mind, the Nasdaq Composite and S&P 500 added 0.75% and 0.77% respectively, today while the Dow Jones Industrial Average jumped 0.67%.
Lots Of Winners
In late trading, 25 members of the Dow Jones Industrial Average were in the green, one of the highest numbers we’ve had the pleasure of revealing since we started this feature just over a month ago. None of the five losers had losses of 1% or more, and most were on the modest side. JPMorgan Chase (NYSE:JPM) was the Dow’s worst-performing member today, losing 0.86%, but that was likely the result of some profit-taking, as the largest U.S. bank is up 5.6% over the past week.
Finishing the day higher by 2.3%, the consumer products behemoth Procter & Gamble (NYSE:PG) was the Dow’s best performer on a percentage basis. All of the Dow’s consumer staples names closed to the upside today. As for P&G, the Ohio-based company reports earnings on July 30.
Sticking with staples for a moment, Walmart (NYSE:WMT), the largest domestic retailer, rose 0.7% despite reports that the company’s e-commerce effort is losing $1 billion. Apparently, those are the costs associated with trying to take on Amazon (NASDAQ:AMZN) in the online retail space.
It was a light day in terms of analyst action on Dow stocks, but Visa (NYSE:V) added almost 1% after Wedbush reiterated an “outperform” rating on the stock.
International Business Machines (NYSE:IBM) gained almost 1% following reports that the stock is slated to enter a prestigious dividend index. Assuming IBM raises its dividend next year, that will mark 25 consecutive years of higher payouts, meaning the stock can enter the S&P 500 Dividend Aristocrats Index, a benchmark that requires members to have raised payouts for at least 25 straight years.
Pharmaceuticals name Merck & Co. (NYSE:MRK) was one of the Dow’s best names today, jumping 1.71% after Mizuho initiated coverage of the stock with a “buy” rating and $97 price target. The shares closed just under $87 Wednesday.
Bottom Line on the Dow Jones Today
It is often said that the Fed is “data dependent,” a notion that could be tested as soon as Friday with the arrival of the June jobs report. Simply put, if that number is perceived to be concerning, stocks could still rally because traders will price in the Fed acting to help the economy, including with an interest rate cut.
For those with bullish leanings, take heart: Barclays was out with a note indicating it is highly possible that the S&P 500 rallies another 10% from current levels. Talk about fireworks.
As of this writing, Todd Shriber did not own any of the aforementioned securities.