S&P 500 poised for record open as focus turns to economic data
By Shashank Nayar
(Reuters) - The S&P 500 looked set to scale a new peak on Wednesday as weaker-than-expected private payrolls data fueled hopes for an extended support from the U.S. central bank.
Energy stocks led premarket gains, with oil majors Chevron Corp (NYSE: CVX ), Exxon Mobil (NYSE: XOM ), Schlumberger NV (NYSE: SLB ) and Halliburton (NYSE: HAL ) rising between 0.4% and 0.7% as crude prices gained ahead of an OPEC+ meeting. [O/R]
Rate-sensitive banks also climbed on cues from higher bond yields. J.P.Morgan, Goldman Sachs (NYSE: GS ), Citigroup (NYSE: C ) and Wells Fargo (NYSE: WFC ) were up about 0.5%.
Wall Street's main indexes have hit record highs recently, with the benchmark S&P 500 notching a solid 2.9% rise in August as investors shrugged off risks around a rise in new coronavirus infections and hoped for the Federal Reserve to remain dovish in its policy stance.
The ADP (NASDAQ: ADP ) report, published ahead of the government's more comprehensive employment report on Friday, showed U.S. private employers hired far fewer workers than expected in August.
Private payrolls increased by 374,000 last month, a huge miss versus a forecast of 613,000.
"If we see employment slowing on Friday, the Fed is most likely to not hint at any tapering until jobs are back on track," said Sam Stovall, chief investment strategist at CFRA.
"The trend remains to be quite favorable with the U.S. markets being among the top 10 performers year-to-date until August."
Fed Chair Jerome Powell has suggested that an improving labor market will be a main factor affecting the decision for a tapering of its massive asset purchases.
Later in the day, data from the Institute for Supply Management's is likely to show that a gauge of manufacturing sector activity moderated to 58.6 in August from 59.5 in the previous month.
Surveys earlier on Wednesday showed Asian and European factory activity lost momentum in August as the coronavirus pandemic disrupted supply chains.
At 8:46 a.m. ET, Dow e-minis were up 89 points, or 0.25%, S&P 500 e-minis were up 14.75 points, or 0.33%, and Nasdaq 100 e-minis were up 53.5 points, or 0.34%.
U.S-listed shares of the world's biggest miner, BHP Group (JO: BHPJ ), dropped 2%, while those in China-focused mining giant Rio Tinto (LON: RIO ) fell 1.3% after tepid China factory data dented copper and iron ore prices.
Shares of Calvin Klein and Tommy Hilfiger owner PVH Corp (NYSE: PVH ) surged 9.4% after it raised its full-year earnings forecast.
Video chipmaker Ambarella gained 10%, and was set for its best singe-day gain since February after it beat profit estimates and forecast revenue above market expectations.
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