Debt Bill Moves to Senate, Stocks Attempt Rebound On Wall Street

Barry Adams
01 Jun, 2023
New York City

Market indexes advanced after lackluster trading in the first hour as investors digested the latest data on the jobs market. 

Private sector payrolls expanded at a slower pace in May and weekly jobless claims edged up slightly but stayed significantly below the elevated level in March. 

Buyers returned after the U.S. House passed  the debt ceiling agreement after months of protracted and contentious negotiations that brought the nation closer to its first ever debt default. 

The so-called Fiscal Responsibility Act passed 314-117, with 165 Democratic votes and 149 Republican votes. 

The bill is expected to face less resistance in the upper chamber of the Democratic-controlled Senate and ready for President Biden's signature before the expected default date June 5.   

With the anticipated ratification of the debt ceiling agreement, market focus is shifting to rate path and the Fed's action at its next meeting on June 14. 

 

Private Payrolls Growth Slowed In May 

Private payrolls expanded in May at a slower pace, according to the latest survey by ADP. 

Employers added 278,000 jobs in May, compared to a downwardly revised 291,000 additions in April. 

The services sector added 168,000, led by 208,000 gains in leisure and hospitality and 32,000 in trade, transportation, utilities.

Payrolls were trimmed in the financial sector by 35,000, education and health by 29,000, information by 15,000 and professional and business by 5,000. 

However, the goods-producing industry added 110,000 jobs, driven by gains in mining of 94,000 and construction 64,000 while manufacturing lost 48,000 jobs. 

Job gains were limited to leisure and hospitality, construction and mining industries while manufacturing and finance trimmed positions. 

"This is the second month we've seen a full percentage point decline in pay growth for job changers. 

Pay growth is slowing substantially, and wage-driven inflation may be less of a concern for the economy despite robust hiring," said ADP's chief economist  Nela Richardson.  

 

U.S. Jobless Weekly Claims Edged Higher 

Initial claims of jobless benefits increased by 2,000 from the previous week to 232,000 in the week ending on 232,000. 

The jobless claims were below the levels seen in March, indicating that tight labor market conditions are likely to persist for months ahead. 

The four week moving average, which removes the weekly volatility, eased 2,500 to 229,500. 

On a seasonally unadjusted basis, claims rose 5,296 to 207,941 and Ohio and New York logged an increase of 2,133 and 1,277 respectively.    

 

U.S. Indexes & Yields 

The S&P 500 index increased 0.4% to 4,197.74 and the Nasdaq Composite increased 0.2% to 12,951.54. 

The yield on 2-year Treasury notes decreased to 4.37%, 10-year Treasury notes edged down to 3.59% and 30-year Treasury bonds held at 3.82%. 

Crude oil increased $0.10 to $68.10 a barrel and natural gas prices increased 8 cents to $2.18 a thermal unit. 

In May, crude oil declined 9.5% and plunged 39% from a year ago.  

 

U.S. Stock Movers

Nordstrom Inc increased 3% to $15.76 after the company reported better-than-expected quarterly results. 

Salesforce Inc declined 5% to $212.38 after the company highlighted softness  in large account sales activities. 

Macy's  Inc declined 4.8% to $12.94 after the company reported weak quarterly results and lowered its annual outlook citing macroeconomic headwinds. 

The company lowered its full-year revenue estimate to between $22.8 billion from $23.2 billion from between $23.7 billion and $24.2 billion in the previous estimate. 

Dollar General Corp plunged 18.4% to $164.40 after the deep discount retailer estimated same store sales in the current year between 1% and 2%, weaker-than-estimated.