Stocks extended gains on Wednesday after a strong reading on private payrolls foreshadowed a solid U.S. jobs number for March.
The S&P 500 was up 0.8%, the Dow Jones Industrial Average added 0.9%, and the Nasdaq climbed 0.5%.
The private sector added 263,000 jobs in March, according to the ADP National Employment report. The reading blew past estimates of 190,500 jobs.
"While this is one of many signals for investors to process, it certainly contributes to the perception that the economy is sure-footed, especially when coupled with the solid first-quarter corporate earnings growth expected by many street analysts," Mike Loewengart, vice president of investment strategy at E*TRADE, wrote in a note. "Despite a prolonged bull market and continued geopolitical uncertainty, many can argue the bull still has further to run."
The official jobs report for March, one of the most closely watched monthly datum, will be released on Friday. Analysts anticipate no drop in recent strength in the labor market with a target of 174,000 jobs expected to have been added to U.S. payrolls last month. The unemployment rate is anticipated to have held at 4.7%, while monthly wages should rise 0.3%.
Energy stocks were the best performers on Wednesday even after a reading from the Energy Information Administration showed an unexpected rise in domestic inventories over the past week. The EIA said crude stocks increased by 1.6 million barrels compared to estimates of a drop of 440,000 barrels. A separate measure from the American Petroleum Institute showed a decrease of 1.8 million barrels in crude oil inventories over the past week.
West Texas Intermediate crude increased 1.5% to $51.78 a barrel on Wednesday. Major oil companies including Exxon Mobil (XOM - Get Report) , Chevron (CVX - Get Report) , Total (TOT - Get Report) and Royal Dutch Shell (RDS.A - Get Report) rose, while the Energy Select Sector SPDR ETF (XLE - Get Report) increased 1.4%.
Non-manufacturing index activity in the U.S. slowed in March at a faster pace than expected. The ISM non-manufacturing index for March declined to 55.2 from 57.6 in February. Analysts anticipated a decrease to 57.
The Federal Reserve's recent discussions over monetary policy will be made public when the minutes from the Federal Open Market Committee's meeting in March are released Wednesday afternoon. At that meeting, the central bank decided to raise the federal funds rate for the third time since 2008 in a near unanimous call. The FOMC also forecast two more rate hikes this year.
Donald Trump and China's President Xi Jinping are scheduled to meet on Thursday and Friday at Mar-a-Lago in Florida in what are expected to be a highly charged discussions. Trump had been highly critical of China, accusing the country of currency manipulation and stealing U.S. jobs. Trump had previously proposed a high tariff on U.S. imports of Chinese-made products. North Korea also will presumably be an important topic of conversation.
Panera Bread (PNRA) shot 14% higher on Wednesday after securing a deal to be purchased by JAB for $7.5 billion. Privately held JAB will purchase the bakery chain for $315 a share in an all-cash deal that values Panera at a 30% premium to its 30-day average at the end of March, before deal talks influenced stock prices. The deal is expected to close in the third quarter.
Monsanto (MON) added 1.5% after blowing past profit and sales estimates. Adjusted earnings of $3.19 a share came in higher than a target of $2.79. Sales rose 12% to $5.07 billion and exceeded consensus of $4.73 billion. The agricultural chemicals company is currently undergoing a $66 billion buyout from Bayer.
Walgreens (WBA - Get Report) declined by 1.1% after falling short of earnings and revenue estimates over its fiscal second quarter. The pharmacy chain earned adjusted profit of $1.36 a share, a penny below estimates. Sales fell 2.4% to $29.45 billion and missed targets of $30.26 billion.
Syngenta (SYT) rose 1% on Wednesday after the European Union gave approval to ChemChina for its $43 billion acquisition of the agricultural chemicals company. The U.S. gave regulatory approval a day earlier. The EU said ChemChina must divest a "significant part" of its Adama pesticide business and some of Syngenta's pesticide units as a condition of the approval.
PPG Industries (PPG - Get Report) urged Akzo Nobel (AKZOY) again to engage in discussions of a potential merger. Paints company PPG had previously made advances two times in March, though Akzo Nobel has declined to participate in talks. PPG said it believes the combined companies would present significant benefit to stakeholders.
Plug Power (PLUG - Get Report) rose 65% after Amazon (AMZN - Get Report) acquired the right to buy up to 23% of the hydrogen fuel cell maker and said it would use the technology to speed up work in its warehouses.