Wall Street stepped into June with confidence as each of the three major U.S. indexes sealed new record highs ahead of the monthly jobs report on Friday.
The S&P 500 was up 0.62%, the Dow Jones Industrial Average increased 0.64%, and the Nasdaq rose 0.78%.
May employment data will likely showcase continuing strength in the labor market, with investors expecting a healthy 175,000 positions to have been added to the U.S. economy. The unemployment rate is forecast to hold at 4.4%, according to FactSet estimates. Hourly earnings are anticipated to have risen 0.2% in May.
Wall Street is even more confident in that headline number after the ADP National Employment report for May breezed past expectations. The U.S. economy added 253,000 private payroll jobs in May, much higher than analysts' target of 181,000 jobs.
"This is just one signal, but it's pretty bad news for the bears," said Mike Loewengart, vice president of investment strategy at E*Trade. "It certainly contributes to the perception that the economy is sure-footed, and will only strengthen the [Federal Reserve's] conviction to raise rates in June. More so when you consider the strong second-quarter corporate earnings growth expected by many Street analysts."
Friday's jobs report could color investors' expectations for the pace of rate hikes for the rest of the year. The Federal Open Market Committee, the monetary policy arm of the Fed, is next set to meet June 13-14, and Wall Street has priced in a nearly 89% chance of a 25-basis-point increase then.
Over on our premium site for investors, Real Money, Tom Graff outlines how to look at Friday's jobs report. Get his insight with a free trial subscription.
Weekly jobless claims increased at a faster pace than anticipated over the past week. The Labor Department reported new claims for unemployment benefits increased 13,000 to a five-week high of 248,000 over the past week, higher than an expected increase to 238,000. The less-volatile, four-week average rose 2,500 to 238,000.
Manufacturing activity in the U.S., meanwhile, unexpectedly expanded in May, according to the ISM Manufacturing Index. The index ticked higher to 54.9 from 54.8 a month earlier. Analysts had anticipated a dip to 54.6.
Construction spending showed a surprise decrease in April, according to the Census Bureau. Spending decreased by 1.4% month over month after a 1.1% increase in March. Analysts anticipated an increase of 0.5%.
On the political front, the United States will withdraw from the Paris climate agreement, President Trump confirmed on Thursday afternoon. The widely anticipated decision comes in spite of a broad push from American companies, business leaders, politicians and even many in the president's own inner circle to do the opposite.
Trump pledged to quit the nearly-200 nation agreement on the campaign trail, but after his election, hope surged that he might change his mind.
In markets, all benchmark indexes posted gains for the month of May. It was the S&P 500's second month of gains in a row and its best since February. The Nasdaq fared even better, and has risen for seven months in a row.
Hewlett Packard Enterprises (HPE - Get Report) shares declined nearly 7% after the enterprise technology company posted weaker-than-expected earnings in its fiscal second quarter and forecast third-quarter adjusted profit below Wall Street estimates.
Though the company's second-quarter results reflected issues with its server unit and competitive pricing, CEO Meg Whitman said HPE's massive corporate restructuring will soon produce a leaner and more-focused company.
"I'd say we have largely overcome most of the execution issues," Whitman said of the major changes at HPE. The company split off its enterprise services business and merged it with Computer Sciences Corp. to create DXC Technology in April.
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"While we remain confident in the long-term story, mostly as a result of our belief that the parts are worth more than the whole and that the future cash optionality will be substantial, we have purposely kept from growing this position in the short term as we recognize the challenges facing the core business," said TheStreet's Jim Cramer, who holds the stock in his Action Alerts PLUS Charitable Trust Portfolio.
Dollar General (DG - Get Report) rose 6.5% following a better-than-expected first quarter. Net income of $1.02 a share beat consensus of 95 cents a share, while revenue of $5.61 billion exceeded estimates of $5.28 billion. The discount chain also bumped its full-year net sales growth target to 5% to 7%, up 100 basis points on both ends.
Express (EXPR - Get Report) plummeted 19% after a disappointing first quarter. The retailer reported a net loss of 6 cents a share, down from earnings of 16 cents a year earlier. Analysts anticipated a narrower loss of 2 cents a share. Revenue of $467 million came in shy of estimates of $467.7 million. Express anticipates full-year adjusted earnings no higher than 48 cents a share, well below consensus of 66 cents.
Deere (DE - Get Report) rose 1.8% after agreeing to purchase Wirtgen, a privately held German construction equipment maker, for 4.6 billion euros ($5.2 billion). The deal is expected to close in the first quarter of fiscal 2018.
Goodyear Tire & Rubber (GT - Get Report) increased 7.2%, following a rating upgrade to overweight from underweight at Morgan Stanley. The firm more than doubled its price target to $52. Morgan Stanley believes that the revolution in mobility could drive growth in miles traveled.
Ford (F - Get Report) reported a surprise increase in sales during May. The automaker saw unit sales increase 2.2%, compared with an estimated 1.2% decline. Truck sales drove the bulk of gains, rising 9.4%. Passenger car sales declined 10%. Meanwhile, General Motors (GM - Get Report) reported a 1.3% sales decline in May, surprising analysts looking for an increase of 4.3%.
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