U.S. stocks moved firmly higher Wednesday, following on from the strongest session for the S&P 500 since early June, as investors continue to closely-track movements in the bond market tied in part to labor market data that suggests a cooling economy heading into the autumn months.
Stocks found their footing Tuesday following a big decline in Treasury bond yields, including a 16 basis point decline in benchmark 2-year notes, following data from the Labor Department showing July job openings fell to their lowest levels in two-and-a-half years.
Paired with a weaker reading for consumer confidence from the Conference Board, the Jolts reading forced an early re-set for both September rate expectations from the Federal Reserve and the strength of the underlying economy heading into September - traditionally the toughest month for U.S. stocks.
The CME Group's FedWatch now suggests an 88.5% chance that the Fed makes no changes to its benchmark lending rate of 5.25% to 5.5% when it meets next month in Washington, with bets on a quarter point hike in November pared back to around 38.5%, down from just over 50% at the end of last week.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.4% lower at 103.120. Benchmark 10-year notes were last seen trading at around 4.108% in the afternoon New York session, near to levels seen in early August, while 2-year paper was pegged at 4.865%.
The pullback in Treasury yields also prompted a solid rally on Wall Street, powered by rate-sensitive tech stocks and big gains for mega-cap names such as Tesla (TSLA) -), Alphabet (GOOGL) -) and Nvidia (NVDA) -), which closed at an all-time high with a market value of around $1.2 trillion.
Wall Street will undoubtedly be focused on jobs data for the remainder of the week, with payroll processing group ADP publishing its August National Employment report at 8:15 am and the Labor Department following up with its official non-farm payroll reading on Friday.
The payroll processing group said around 177,000 jobs were created in the private sector this month, down from the upwardly-revised tally of 371,000 in July and the smallest increase since March.
The ADP release also showed a year-on-year increase of 5.9% for those remaining in their positions and 9.5% for those seeking a new role - both readings were the slowest in nearly two years.
Markets will also looked through a second estimate of second quarter GDP growth before the open, as well as key data on second quarter employment costs and inflation pressures from the Commerce Department at 8:30 am Eastern time.
Second quarter GDP growth was estimated modestly lower, at 2.1% from a prior reading of 2.5%, while the closely-tracked GDP deflator, which feeds into Federal Reserve rate forecasts, eased to 2%, the lowest in three years.
Heading into the afternoon of the trading day on Wall Street, the S&P 500 was marked 20 points higher while the Dow Jones Industrial Average gained 70 points.
The tech-focused Nasdaq, which gained 1.74% last night, was marked 84 points higher.
Oil prices were also on the move ahead of Energy Department data on domestic crude stockpiles later this morning, with traders closely eying the forecast track of Hurricane Idalia.
The Category 4 storm is expected to make landfall on the northwest coast of Florida later this morning but largely bypass the key drilling installations in the Gulf that sit nearer towards the Texas and Louisiana coasts.
WTI crude futures for October delivery, the U.S. benchmark that is closely tied to domestic gas prices, were marked 26 cents higher on the session at $81.41 per barrel.
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