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Solid private sector hiring helped all major indexes notch up record highs on Thursday. Companies continued to hire new workers in addition to retaining existing workers last month, indicating strength in the labor market. Uptick in manufacturing activities also added to bullish sentiments, but decrease in construction outlays and decline in the pace of U.S. auto sales remains a cause for concern.
For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article.
The Dow Jones Industrial Average (DJI) advanced 0.7% to a record close at 21,144.18. The S&P 500 rose 0.8% to a record close at 2,430.06. The tech-laden Nasdaq Composite Index gained 0.8% to a record finish at 6,246.83. A total of around 6.9 billion shares were traded on Thursday, higher than the last 20-session average of 6.7 billion shares. Advancers outnumbered declining stocks on the NYSE by a 4.73 to 1 ratio.
Upbeat Private Sector Jobs Report
According to ADP data released on Thursday, private payrolls surged by 253,000 in May which came above its consensus estimate of 185,000. As per the report, services recorded a gain of 205,000 new jobs with professional and business services contributing 88,000 jobs, marking its best month in about three years. Education and health services contributed toward another 54,000 jobs.
Construction witnessed an increase of 37,000 jobs, manufacturing experienced 8,000 job additions while mining added 3,000 new jobs. As per the report, small businesses witnessed an increase of 83,000 jobs during the month, medium-sized businesses hired another 113,000 workers and large firms added 57,000 jobs.
In contrast, as per the Labor Department, weekly jobless claims hit a five-week high last month. For the week ending May 27 seasonally adjusted initial claims increased to 248,000, an increase of 13,000 from the previous week’s revised level. The previous week’s revised level was up by 1,000 from 234,000 to 235,000.
Manufacturing Steady, Construction Spending Dips
The Institute for Supply Management (ISM) manufacturing index for May was recorded at 54.9, marginally lower than the estimate of 55. However, this was still higher than April’s reading of 54.8.
The broader Industrials Select Sector SPDR (XLI) advanced 0.7% on Thursday. Some of the key holdings of the industrials sector in the S&P 500 including General Electric Co (GE – Free Report) and Union Pacific Corp (UNP – Free Report) advanced 1.2% and 0.3% respectively.
As per the Commerce Department, construction outlays ran at a seasonally adjusted annual rate of $1.22 trillion, which is 1.4% lower than March. The releases of mixed bag of economic data prompted investors to remain focused on nonfarm-payrolls report, scheduled to be released on Friday.
Auto Sales Dip
The seasonally adjusted, annualized rate of sales decreased to 16.7 million, a decline from 17.2 million in a year ago period, on weaker fleet volume across the industry. Despite higher discounts and strong truck demand, U.S. light-vehicle sales slipped 0.5% in May.
Stocks that made Headlines:
Shares of packaged foods maker Pinnacle Foods, Inc. (PF – Free Report) have gained 9.1% since May 31, after media reports claimed that Conagra Brands Inc. (CAG – Free Report) is interested in acquiring it. Conagra has rallied 3.7% since the news. (Read More)
Disregarding criticism from the Native American tribes and environmental groups, Texas-based pipeline operator Energy Transfer Partners L.P.’s (ETP – Free Report) $3.8 billion project-Dakota Access Pipeline became operational on Jun 1. (Read More)
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