Stocks were mixed on Wednesday, with the S&P 500 gaining for a fifth straight session to end the day at yet another record closing high. Traders considered stronger-than-expected prints on private payroll gains and pending home sales and looked ahead to more economic data out at the end of this week.
Wednesday's session also marked the final day of trading for the month of June, the second quarter, and the first half of 2021. The S&P 500 closed out both the month of June and the first half of the year with sharp advances. The blue-chip index increased more than 2% in June for a fifth straight monthly advance, and has increased by about 14.4% for the first half of 2021.
The Nasdaq gained more than 5% in June and has increased 12.5% for the year to date. The Dow ended June little changed, underperforming against the other two major indexes as traders rotated back into technology and growth stocks. The index has still held onto a 12.7% advance for the year-to-date, however.
In the S&P 500, the information technology, real estate and communication services sectors came in as the top-performers for the April through June quarter, and only the utilities sector ended the quarter lower.
Other asset classes have posted more mixed performances. The 10-year Treasury yield hit a year-to-date peak of 1.77% in March but ended the quarter yielding just under 1.5%. West Texas intermediate crude oil has increased more than 20% in the second quarter, with the rebound in energy prices coinciding with a pick-up in energy demand and fast-improving travel trends. Cryptocurrencies, however, have had a tougher second quarter, and Bitcoin has tumbled from around $59,000 at the end of March to around $35,000 as of Wednesday, albeit while still being up significantly over a multi-year horizon.
"One of the big calls we've made is, stocks will outperform bonds, and that's one of the big ways we're constructing our portfolios," Ryan Detrick, LPL Financial chief market strategist, told Yahoo Finance. "We still think that's the play, that stocks will probably do better than bonds the second half of this year as the economy continues to improve, open up, and it'll be led by those earnings which will justify pretty pricey multiples."
The major U.S. stock indexes have moved only modestly so far this week, hovering at or near record levels while traders await more catalysts to push equities higher. Many have pointed to the prospects of another batch of strong corporate earnings results as a likely source of upcoming strength, given the firming economic backdrop as pandemic risks in the U.S. recede further.
On Wednesday, traders got stronger than expected update on the labor market in ADP's June private payrolls report. This underscored the ongoing economic recovery with a sixth straight monthly increase in employment, with jobs rising by 692,000 versus the 600,000 expected.
Consumer confidence has also risen and pointed to Americans' increased propensity to spend, with the Conference Board's consumer confidence index racing to the highest level since February 2020 in June.
"If you look at what's really been powering the economy and powering the stock market, it's been the fact that there's been so much fiscal stimulus pour into the economy," David Lefkowitz, UBS Global Wealth Management head of equities for the Americas told Yahoo Finance. "What's really crucial though is that a lot of that fiscal stimulus has actually not been spent year. It's sitting on the balance sheets of consumers."
"It's a lot of dry powder for continued gains in the economy, and that translates into good news for corporate profits down the road," he added.
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4:10 p.m. ET: S&P 500 posts fifth straight monthly advance, rises 14% in first half of 2021
Here were the main moves in markets as of 4:10 p.m. ET:
Gold (GC=F): +$7.00 (+0.40%) to $1,770.60 per ounce
10-year Treasury (^TNX): -3.7 bps to yield 1.4430%
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12:49 p.m. ET: Chinese ride-hailing giant Didi opens for trading on the NYSE at $16.65 per share, jumping above $14 IPO price
Shares of Chinese ride-hailing giant Didi Global (DIDI) began trading on the New York Stock Exchange at $16.65 apiece Wednesday afternoon, representing a rise of 19% from its IPO price of $14 per share on Tuesday. At the time of the initial public offering, the company sold 316.8 million shares to raise $4.4 billion, making it one of the largest initial public offerings of a Chinese company in the U.S. since Alibaba's (BABA) $25 billion listing in 2014.
Revenues were 141.7 billion yuan, or $21.6 billion, in 2020, compared to 154.8 billion yuan, or nearly $24 billion, in 2019. Net losses widened to 10.6 billion yuan, or $1.6 billion, in 2020 from 9.7 billion yuan, or about $1.5 billion, in 2019. However, this was narrower than the loss of 15 billion yuan, or about $2.3 billion, posted in 2018.
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10:12 a.m. ET: Pending home sales unexpectedly jumped in May in highest reading for the month since 2005
Pending home sales were up 8% in May month-on-month, helping reverse April's 4.4% drop, according to data from the National Association of Realtors. This brought the pending home sales index to 114.7, or the highest reading for the month of May since 2005.
"May's strong increase in transactions – following April's decline, as well as a sudden erosion in home affordability – was indeed a surprise," Lawrence Yun, NAR's chief economist, said in a press statement. "The housing market is attracting buyers due to the decline in mortgage rates, which fell below 3%, and from an uptick in listings."
"The record-high aggregate wealth in the country from the elevated stock market and rising home prices are evidently providing funds for home purchases,” Yun added.
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9:31 a.m. ET: Stocks open slightly lower
Here's where markets were trading just after the opening bell:
ADP said Wednesday morning that private payrolls increased by 692,000 in June for a sixth straight monthly rise. Consensus economists were looking for an increase of 600,000, according to Bloomberg consensus data. In May, private employment grew by a 886,000 jobs, according to ADP's downwardly revised print. The beat was driven by a strong improvement in service-sector employment, with leisure and hospitality jobs up by 332,000 in June to add to the 414,000 brought back in May.
The print comes two days before the Labor Department's "official" non-farm payrolls report, which is expected to show a similar trend in improving labor market trends. Non-farm payrolls likely rose by 700,000, according to Bloomberg consensus estimates, including 610,000 private payrolls. Still, ADP's has typically been an imprecise indicator of the Labor Department report, especially during the pandemic. The absolute error between the ADP and Labor Department private payrolls data has been 486,000 since January, according to an analysis from High Frequency Economics.
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7:23 a.m. ET Wednesday: Stock futures dip ahead of private payrolls data
Here's where markets were trading Wednesday morning:
NEW YORK , NY - JUNE 02: Exterior view of the New York Stock Exchange and Wall St. as new company Organon start trading next thursday in New York on June 02 2021. Organon look to expand to provide treatments for other conditions unique to women, about 80% of the new company's revenues will come from outside the U.S (Photo by Kena Betancur/VIEWpress) ·VIEW press via Getty Images
