US stocks rally for 2nd day on bets for Fed rate cut

VIDEO: REUTERS
Traders work on the floor at the New York Stock Exchange, June 5, 2019.
Traders work on the floor at the New York Stock Exchange, June 5, 2019.PHOTO: REUTERS

NEW YORK (AFP) - Wall Street stocks rose for a second straight session on Wednesday, (June 5) with solid data on the US services sector offsetting a weak private sector hiring report.

Analysts also cited continued positive momentum following more dovish commentary from Federal Reserve officials, dynamics that let the market shrug off worries about trade tariffs and the weakening global growth outlook.

The Dow Jones Industrial Average finished at 25,539.37, up 0.8 per cent.

The broad-based S&P 500 also gained 0.8 per cent to 2,826.13, while the tech-rich Nasdaq Composite Index advanced 0.6 per cent to 7,575.48.

Payrolls firm ADP estimated that US companies added just 27,000 new jobs in May, a fraction of the expected figure and the weakest result in more than nine years.

The report comes ahead of Friday's more closely-watched Labor Department employment report.

But the ADP report was countered by data from the Institute for Supply Management that showed services sector activity strengthening in May after two monthly declines.

Also, investors have cheered recent comments from Fed officials, including Chair Jerome Powell, who on Tuesday that acknowledged the economic risks connected to trade wars and said the Fed was willing to act if needed to support growth.

"The Fed's dovish shift has been the main driver behind the bullish sentiment, but since we still haven't seen any progress being made on the trade standoff with China, volatility could still return," said a note from Gorilla Trades strategist Ken Berman.

Among individual companies on Wednesday, cloud computing company Salesforce surged five percent after reporting a 14 per cent jump in quarterly profits to US$392 million on higher sales.

Campbell Soup leaped 10.1 per cent after lifting its full-year profit forecast following better-than-expected results. Chief executive Mark Clouse described profitability trends as improving.

But petroleum-linked stocks were broadly lower following another pullback in oil prices. Dow member Exxon Mobil shed 0.9 per cent and oil-services companies Halliburton and Transocean both lost more than 3 per cent.