Stocks finished higher Wednesday amid trade optimism and increased expectations for Fed interest rate cuts. Hopes of a negotiated trade solution between the U.S. and Mexico further bolstered investor sentiment. The Dow climbed 207 points, while the S&P 500 gained 0.8%, with both indexes notching their best two-day performance since January. The Nasdaq Composite was up 0.6%.
Ten of 11 S&P 500 sectors closed in positive territory, with Tech, Industrials, and Consumer Staples rising more than 1%. Energy shares lagged as oil entered bear market territory, defined as sinking more than 20% below its recent peak (in April). WTI crude settled 3.4% lower at $51.68/barrel amid a surprise surge in U.S. crude stockpiles. In earnings, Salesforce.com rallied 5.1% to $158.44 after the software company easily topped analyst projections on the top and bottom line.
On the data front, the Institute for Supply Management revealed services sector activity expanded at a faster-than-expected clip in May. A separate report showed the U.S. private sector added 27,000 jobs last month, the weakest reading since May 2010. The soft figure bolstered the case for lower rates ahead of Friday’s more comprehensive jobs report. The U.S. Treasury yield curve steepened, with the yield spread between the two- and 10-year notes widening the most since November. The yield on the 10-year note was unchanged at 2.12%, while the yield on the two-year note dropped four basis points to 1.84%.
Breadth was even on issues on the NYSE and negative by 3:2 on the Nasdaq. Composite NYSE volume was more than 3.5 billion shares.