On Wednesday, the S&P 500 and the tech-heavy Nasdaq indices rose to record highs as data indicating an economic slowdown heightened hopes of a Federal Reserve rate cut in September.
The Dow Jones Industrial Average edged slightly lower due to a sell-off in healthcare and consumer stocks. Trading hours were shortened ahead of the Independence Day holiday. Markets will be closed on Thursday in observance of the holiday, and trading volumes are expected to remain low throughout the week.
The ADP employment report and weekly jobless claims data both showed easing conditions in the labor market, setting the stage for Friday's highly anticipated non-farm payrolls report. The market hopes signs of a weakening labor market will prompt the Federal Reserve to cut rates.
"The jobless claims data was very strong, which aligns with the overall trend and may indicate that the labor market is softening. This should be good news for the Federal Reserve," said David Morrison, Senior Market Analyst at Trade Nation.
Additionally, the Institute for Supply Management's PMI data came in weaker than expected, and factory orders unexpectedly declined. According to LSEG's FedWatch data, investor bets on a rate cut in September have increased to over 70%.
The minutes from the Federal Reserve's June meeting will be released after the market close.
Tesla rose 6.5%, nearing a six-month high, after the company reported a smaller-than-expected decline in second-quarter vehicle deliveries on Tuesday, boosting its stock by over 10%.
The Philadelphia Semiconductor Index gained 1.92%, benefiting from the rise in U.S.-listed shares of Taiwan Semiconductor Manufacturing Company and Broadcom.
