Stock market today: US stocks rise amid more signs of jobs market cooling
06/05/2024 20:40
Bets on Fed rate cuts are tentatively rising as investors weigh signs of a softer labor market and cooling economy.
US stocks popped on Wednesday, buoyed by tentative optimism for interest-rate cuts amid signs of slowing labor demand and a cooling economy.
The S&P 500 (^GSPC) rose 0.4%, while the tech-heavy Nasdaq Composite (^IXIC) led the gains, popping 0.7%. Meanwhile the Dow Jones Industrial Average (^DJI) gained about 0.2%.
Stocks have had a bumpy ride as the market wavers over whether to interpret a softening in economic readings as a positive sign for the chances of rate cuts from the Federal Reserve or a negative sign signaling the start of a broader slowdown.
Data out Tuesday showed job openings fell to a three-year low in April. Cracks in the labor market could spur the Fed to begin lowering borrowing costs, but they are also a sign the economy could be headed for recession rather than a soft landing.
Read more: How does the labor market affect inflation?
That said, hopes for a Fed shift appear to be growing. About 65% of traders now expect policymakers to reduce the benchmark rate at their September meeting, compared with less than 50% a week ago, according to the CME FedWatch tool.
The ADP private payrolls report released Wednesday provided the latest evidence of labor market cooling, as private-sector growth came in below estimates. The bigger focus, though, is firmly on the labor data highlight of the week, the key May jobs report coming Friday.
In individual movers, Hewlett Packard Enterprise (HPE) shares rose as much as 15%, setting the stock up for its biggest gain since 2016. The surge came after HPE posted a revenue beat fueled by a jump in sales of AI-focused servers.
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Stocks pop at the open
US stocks popped on Wednesday, buoyed by tentative optimism for interest-rate cuts amid signs of slowing labor demand and a cooling economy.
The S&P 500 (^GSPC) rose 0.4%, while the tech-heavy Nasdaq Composite (^IXIC) led the gains, popping 0.7%. Meanwhile, the Dow Jones Industrial Average (^DJI) gained about 0.2%.
The moves come as hopes for a Fed shift appear to be growing. According to the CME FedWatch tool, about 65% of traders now expect policymakers to reduce the benchmark rate at their September meeting, compared with less than 50% a week ago.
Some tech stock intel
The AI chip craze is expected to bring big business to Lam Research (LRCX).
The chip supplier, whose customers include Intel (INTC), Samsung, and Taiwan Semiconductor (TSMC), foresees its high bandwidth memory business tripling this year, and expects “even stronger” demand in 2025.
“Frankly, I see continued strength for the foreseeable future,” Lam Research CFO Doug Bettinger told me inside Bank of America’s Global Technology Conference late Tuesday. “The opportunity in front of this industry and the opportunity in front of Lam specifically is amazing,” Bettinger added.
This week, Bank of America analysts raised their price target on the stock to $1,100 while maintaining a buy rating.
Analyst Vivek Arya (who also struck a bullish tone on Nvidia on Yahoo Finance Live yesterday) noted that while chip equipment makers are currently trading at a premium relative to historical levels, he and his team believe valuation is justified in part due to AI leading to record levels of wafer fab equipment (WFE) intensity.
The company's recently approved 10-for-1 stock split, along with a new $10 billion share buyback, re-iginited investor excitement last month.
However, Lam remains an under-performer compared to rivals. The stock is up 18% this year, versus Applied Materials (AMAT) 31% surge and ASML Holding's (ASML) 26% climb.
Here comes Apple's WWDC
Amid a five-day rally, Apple's (AAPL) stock is taking dead aim at breaking through its late January closing high of $195.75 ahead of WWDC this coming Monday.
Morgan Stanley analyst Erik Woodring is out with a great deep dive into what's expected from the event, and Apple's stock price around WWDC.
Says Woodring:
"We believe that at WWDC, Siri 2.0 will be introduced as a next-gen, voice-activated virtual assistant/intelligent layer capable of processing more complex commands directly on the iPhone, which will improve the utility value of the device and its native applications, including text/website summarization, automated messaging, new photo editing tools, and more. In addition, we believe it's highly likely Apple announces a cloud-based foundation model partnership at WWDC (GOOGL or OpenAI?), which would add broader cloud-based AI chatbot-like features to iOS18. While we'd expect Siri's capabilities to continue to evolve over time, including deeper integration of more complex multicommands with third-party applications in future software updates, this would represent Apple's most important software overhaul to-date, and formally enter Apple into the mega-cap Gen AI race."
WWDC news gets embraced by investors after the event, historically speaking. (Morgan Stanley) GameStop, day 3
And I am still on GameStop (GME) stock watch.
Shares are down about 1% pre-market following a 5.36% slide on Tuesday. The stock is off by 36% from the highs hit on Monday after Roaring Kitty's post.
I did a special taping of my 'Opening Bid' podcast yesterday afternoon, 100% focused on GameStop. Check it out below. I came away thinking — maybe I am thinking about this stock entirely the wrong way!
