By Ankika Biswas, Lisa Pauline Mattackal and Saeed Azhar
(Reuters) -The tech-laden Nasdaq rose to record highs on Wednesday as data pointing to a weakening economy raised hopes the Federal Reserve could cut interest rates in September.
Stocks closed slightly lower, pressured by selling of healthcare and consumer stocks during a shortened trading session ahead of the Fourth of July. The market will remain closed on Thursday for US Independence Day, keeping trading volumes limited throughout the week.
Both ADP’s employment report and weekly unemployment benefits data pointed to an easing in labor market conditions ahead of Friday’s closely watched nonfarm payrolls report. Markets are hoping that signs of weakness in the labor market will prompt the Fed to cut rates.
“It’s a pretty high number of jobless claims, and it’s part of an overall trend that’s probably indicative of a easing in the labor market. It should be very welcoming for the Fed,” said David Morrison, senior market analyst at Trade Nation.
In addition, PMI data from the Institute for Supply Management was weaker than expected, and factory orders fell unexpectedly. Investors raised their expectations for a September rate cut to more than 70%, according to LSEG’s FedWatch.
Minutes of the June Fed meeting are expected after the market closes.
Tesla (NASDAQ:) rose 6.5% to trade near a six-month high after surging more than 10% on Tuesday following a smaller-than-expected decline in second-quarter car deliveries.
The Philadelphia SE Semiconductor Index rose 1.92%, helped by gains in the US listings of Taiwan Semiconductor Manufacturing and Broadcom (NASDAQ:).
Nvidia (NASDAQ:) closed 4.6% higher, after falling on Tuesday, while some other megastocks were weaker, such as Amazon (NASDAQ:), closing 1.2% lower.
“The trend right now is towards rotation… we have quite a few days where we see the Russell falling and the tech rising and vice versa,” Morrison said, although he noted that the market’s optimism around mega-cap tech stocks remains was always strong.
The S&P 500 is up more than 15% through the first half of 2024, largely supported by top technology-related stocks with high momentum. The benchmark index’s equal-weighted counterpart rose just 5%, with small- and mid-cap stocks lagging significantly.
The Dow Jones Industrial Average fell 23.85 points, or 0.06%, to 39,308.00, the S&P 500 gained 28.01 points, or 0.51%, to 5,537.02 and gained 159.54 points, or 0.88%, to 18,188.30.
Paramount Global rose nearly 7% after Shari Redstone’s National Amusements reached a tentative agreement to sell its controlling stake in the media giant to David Ellison’s Skydance Media.
First Foundation (NYSE:) fell nearly 24% after the lender, which owns a massive portfolio of multifamily real estate loans, announced an unexpected $228 million capital raise.
On the NYSE, advancing issues outnumbered declining issues by a ratio of 2.65 to 1. There were 287 new highs and 50 new lows on the NYSE.
The S&P 500 posted 20 new 52-week highs and 4 new lows, while the Nasdaq Composite posted 51 new highs and 114 new lows.
Volume for the shortened session on U.S. exchanges was 7.11 billion shares, compared with the full session average of 11.64 billion over the past 20 trading days.
