Stock Market Today: Stocks Post Gains on Rising Rate-Cut Hopes

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Stocks caught a tailwind Wednesday as more signs of a cooling labor market boosted market participants' expectations for an earlier-than-expected rate cut from the Federal Reserve. Traders and investors also digested another batch of quarterly earnings and more fresh economic data.

Starting with econ news. The next jobs report lands at the end of the week, but a bad-news-is-good-news reading on the labor market helped lift equities on Wednesday. The private sector added 152,000 jobs last month, according to ADP (ADP), a marked slowdown from the 188,000 hires made in April. Economists were looking for the ADP survey to show the addition of 175,000 jobs last month.

The ADP report "is too unreliable to take seriously," notes Ian Shepherdson, chairman and chief economist at Pantheon Macroeconomics, but it is consistent with his firm's prediction for hiring to slow in the months ahead. "We're sticking with our Homebase model forecast for May of approximately 150,000 and continue to brace for a run of sub-100,000 payroll prints over the summer months," the economist writes.

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The ADP data follow yesterday's report that job openings fell to a three-year low of 8.1 million in April, below the 8.35 million economists were expecting. Signs the red-hot labor market is cooling lifted expectations for the Federal Reserve to enact its first quarter-point rate cut in September. According to CME Group's FedWatch Tool, the probability of a September rate reduction rose to 59% from 56% a day ago.

In other econ developments, rate-cut expectations were tempered somewhat by a more encouraging reading on the U.S. services sector. Economic activity in the sector grew in May after contracting in April for the first time since December 2022, said the Institute for Supply Management's Services ISM Report On Business.

"The increase in May is a result of notably higher business activity, faster new orders growth, slower supplier deliveries, and despite the continued contraction in employment," Anthony Nieves, chair of the ISM Services Business Survey Committee, said in a media release.

Stocks making moves

In single-stock news, Hewlett Packard Enterprise (HPE) stock rose nearly 11% after the technology company beat top- and bottom-line expectations for its fiscal second quarter and issued a strong outlook thanks to solid demand for its artificial intelligence (AI) servers.

CrowdStrike Holdings (CRWD, +12%) stock was another Wednesday winner following a strong quarterly earnings report. The cybersecurity company not only beat top- and bottom-line expectations for its fiscal first quarter, but CrowdStrike also lifted its full-year forecast. CRWD's upside following a beat-and-raise report is just more of the same for the cybersecurity stock. Indeed, CrowdStrike has been a big winner so far in 2024, rising more than 25% for the year to date through early June.

If a Dollar Tree falls in the forest

Shares in Dollar Tree (DLTR) sold off after the retail chain announced a strategic review of its Family Dollar business, which could include a sale. The move comes less than three months after the company announced it would close 970 underperforming Family Dollar stores.

"A consumer pullback has only exacerbated Dollar Tree's losing battle to competitors such as Walmart and Dollar General," writes Christine Short, vice president of research, at The Short List. "The Family Dollar brand has been the culprit of poor overall results for the last several quarters."

DLTR stock lost 4.9% on the session, making it the second-worst performing issue in the S&P 500 on Wednesday.

As for the main indexes, the broader S&P 500 rose 1.2% to 5,354, while the tech-heavy Nasdaq Composite added nearly 2% to 17,187. The blue chip Dow Jones Industrial Average rose 0.3% to 38,807.

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Dan Burrows is Kiplinger's senior investing writer, having joined the publication full time in 2016.

A long-time financial journalist, Dan is a veteran of MarketWatch, CBS MoneyWatch, SmartMoney, InvestorPlace, DailyFinance and other tier 1 national publications. He has written for The Wall Street Journal, Bloomberg and Consumer Reports and his stories have appeared in the New York Daily News, the San Jose Mercury News and Investor's Business Daily, among many other outlets. As a senior writer at AOL's DailyFinance, Dan reported market news from the floor of the New York Stock Exchange.

Once upon a time – before his days as a financial reporter and assistant financial editor at legendary fashion trade paper Women's Wear Daily – Dan worked for Spy magazine, scribbled away at Time Inc. and contributed to Maxim magazine back when lad mags were a thing. He's also written for Esquire magazine's Dubious Achievements Awards.

In his current role at Kiplinger, Dan writes about markets and macroeconomics.

Dan holds a bachelor's degree from Oberlin College and a master's degree from Columbia University.

Disclosure: Dan does not trade individual stocks or securities. He is eternally long the U.S equity market, primarily through tax-advantaged accounts.