S&P 500 Closes at Another Record

Posted by Wall Street Journal

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U.S. stocks advanced Wednesday, with the S&P 500 index hitting a record high, as investors weighed a mixed bag of news on the economy.

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The Dow Jones Industrial Average advanced 15.19 points, or 0.1%, to 16737.53. The S&P 500 tacked on 3.64 points, or 0.2%, to 1927.88, its 16th all-time high this year.

The Nasdaq Composite Index gained 17.56 points, or 0.4%, to 4251.64.

On Tuesday, the Dow slipped 21 points, or 0.1%, to snap a three-session win streak, and the S&P 500 eased less than 0.1%, failing to close at a record for the first time in four sessions.

Stock benchmarks started Wednesday in the red but drifted higher in midday trading, as investors weighed mixed economic reports.

“Now’s going to be the time when the data is, or isn’t, going to point to an accelerating recovery,” said Hank Herrmann, chief executive of money-management firm Waddell & Reed. But “there’s still some confusing elements.”

Many investors have been holding tight in their current positions or raising cash levels as the S&P 500 trades at all-time highs. Wells Fargo Private Bank, which oversees $170 billion in client cash, recently raised its recommended cash level for its advisers. Mark Litzerman, head of equity research for the bank, said that the bank plans to invest that cash eventually, but it is holding back until it gets a clearer read on the economic outlook.

“One of the big conundrums for investors is, if you take money out of a certain asset class, where do you put it?” he said. “We’re waiting to see how things play out with the economy this summer before we make a move.”

Stock futures had pushed lower before the market’s open after a disappointing report on the labor market. Data compiled by Automatic Data Processing and Moody’s Analytics showed that 179,000 private-sector jobs were added in May, falling short of expectations of a 210,000 increase.

But benchmarks pared losses after a report on service-sector activity came in better than expected. The Institute for Supply Management’s nonmanufacturing composite index for May came in at 56.3, above expectations of 55.2.

Despite the raft of data, trading remained relatively light on Wednesday, traders said. “The volume has been awful,” said Michael O’Rourke, chief market strategist at JonesTrading Institutional Services.

Investors are awaiting Thursday’s policy-setting meeting for the European Central Bank, when most economists expect the bank to cut rates, and Friday’s U.S. employment report. Wednesday’s ADP report is seen as a preview of the government’s May employment report Friday, which is expected to show nonfarm-payroll growth of 210,000.

Among other economic data released Wednesday, the trade deficit for April widened 6.9% to $47.2 billion versus expectations of $40.9 billion. First-quarter productivity was revised to show a decline of 3.2% and unit labor costs increased 5.7%, close to expectations.

The yield on the 10-year Treasury note rose to 2.604%, after settling at a three-week high of 2.592% late Tuesday.

Gold futures lost less than 0.1%, to settle at $1,244.00 a troy ounce, after snapping a six-session losing streak on Tuesday. Crude-oil futures slipped less than 0.1% to settle at $102.64 a barrel.

The dollar rose against the euro and the yen.

The Stoxx Europe 600 was little changed, gaining less than 0.1%. Economic data out of the euro zone continued to support expectations that the ECB will introduce new stimulus measures by either cutting interest rates or boosting liquidity through asset purchases. Data firm Markit said its composite purchasing managers index, which measures activity across both the manufacturing and services sectors, fell to 53.5 in May from 54 in April.

Asian markets were mostly lower, with China’s Shanghai Composite falling 0.7% to suffer a fourth-straight decline. Japan’s Nikkei Stock Average bucked the regional trend by tacking on 0.2%. 

New on WSJ: Frontier Markets

Among other economic data released