Stocks surge on hopes for a strong jobs report
Stocks shot higher Wednesday after data showed that the U.S. private sector added more jobs than expected in September, raising hopes of a strong reading in the government’s payrolls report due Friday.
The ADP National Employment Report showed that private employers added 200,000 jobs in September, up from 186,000 in August. Economists polled by Reuters had expected an addition of 194,000 jobs.
The Federal Reserve, which kept interest rates unchanged earlier this month, has said it needs to see more improvement in the labor market and be confident that inflation will increase before raising rates. Inflation remains below the Fed’s 2 percent target.
“The ADP numbers were consistent with what we’ve been seeing in the last few months with the labor market continuing to tighten,” said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.
“It’s only a matter of time before the Fed raises rates but I don’t think that will happen in October.”
Investors will look for clues on the timing of a rate hike when Fed Chair Janet Yellen and St. Louis Fed President James Bullard speak at a conference in St. Louis later on Wednesday.
Yellen said last week the central bank remained on track to raise rates this year. The Fed meets next on Oct. 27-28.
U.S. stocks mostly closed higher on Tuesday after nearing August lows, helped by a bounce in healthcare stocks, with the S&P 500 snapping a 5-day losing streak.
Investors, worried about a slowing global economy, will be keen to put a bruising quarter behind them and look ahead to third-quarter earnings season, which begins next week.
Although the market’s recent rout, triggered by fears of slowing growth in China, has forced many strategists to slash year-end expectations, a Reuters poll shows the S&P 500 is expected to end 2015 roughly 11 percent above current levels.
Shares of Ralph Lauren (RL) were up after the fashion powerhouse said its founder and CEO was stepping down and being replaced by the head of Gap’s Old Navy division. Shares of Gap (GPS) were lower in the early going.
Tesla (TSLA) jumped after the first delivery of its long-awaited Model X electric SUV.