Stocks finished down but off lows Thursday after private payrolls in the U.S. in May jumped the most in nearly a year and investors weighed a report that said President Joe Biden may be open to a corporate tax rate lower than 28%.
The Dow Jones Industrial Average ended down 23 points, or 0.07%, to 34,577, the S&P 500 declined 0.36% and the Nasdaq fell 1.03%.
The U.S. economy added 978,000 jobs last month, according to the ADP National Employment Report. That stronger-than-expected total could stoke concern about wage inflation as the economy rebounds from the coronavirus pandemic.
Meanwhile, the number of Americans filing for first-time unemployment benefits fell for a fifth week to 385,000, declining to below 400,000 for the first time since the pandemic.
The Labor Department on Friday will publish the nonfarm payrolls report for May. Economists surveyed by FactSet estimated that the U.S. added 650,000 jobs in May following April's increase of a less-than-expected 266,000.
The Washington Post reported that Biden offered to create a tax floor of 15% on businesses, instead of raising the corporate tax rate to 28%.
"With ADP knocking it out of the park, and jobless claims breaking that 400k barrier - a pandemic low - all eyes will be on the larger jobs picture (Friday)," said Mike Loewengart, managing director of investment strategy at E-Trade.
"With seemingly all systems go on the jobs front, the economy is flashing some very real signs that this isn’t just a comeback - expansion mode could be on the horizon.
"So what does that translate to? Likely more pressure on the (Federal Reserve) to make a move - perhaps sooner than many thought from the outset," Loewengart added. "All this being said, keep in mind that jobless claims are not where they were pre-pandemic, which could temper any Fed action."
Investors have been closely watching for signs of inflation and indications of whether the Fed could put the brakes on the rebounding U.S. economy sooner than anticipated. On Thursday, the Institute for Supply Management reported its services index expanded at the fastest pace on record in May.
Fed officials repeatedly have said it's too early to withdraw support for an economy just beginning to rebound from the COVID-19 pandemic.
But Philadelphia Fed President Patrick Harker said Wednesday the central bank should soon begin discussing the time frame for paring back on its bond-buying program of $120 billion a month.
“I think it is appropriate for us to slowly, carefully move back on our purchases at the appropriate time,” Harker said during a virtual Women in Housing and Finance event. “When that is, that is something we need to start discussing.”
AMC Entertainment (AMC) - Get Report finished down 18% after announcing it filed to sell up to 11.55 million shares.
The stock was powering higher before the announcement, a day after the movie-theater chain and meme-stock favorite soared to an all-time high.
AMC cautioned investors Thursday against purchasing the shares "unless you are prepared to incur the risk of losing all or a substantial portion of your investment."
Jim Cramer, TheStreet's founder, said Wednesday he thinks AMC is now well into "overvalued" territory. The stock's gains have come amid intensifying competition in the home content-streaming market and the impact of COVID-triggered restrictions on public gatherings around the world.