Stock gains accelerated by midday Wednesday as the ADP jobs report showed a continued positive trend towards an economic recovery.
All three major U.S. indices were up considerably, with the S&P 500 up just over 1%, after having posted a morning gain of 0.8%. The 10-Year Treasury yield rose to 0.76% after having risen to just 0.72% in the morning. The yield hasn’t been at its midday Wednesday level since mid April.
ADP said the U.S lost 2.7 million jobs in May, far better than the expected 8.7 million and an improvement over April’s job loss of 20 million. This highlights the market’s thesis, valid so far, that the economy is on pace to recover fairly quickly.
The confidence in a cyclical upturn is allowing bank stock to outperform, as the yield curve between the two-year and 10-year treasuries expands notably. The Invesco KBW Bank ETF (KBWB) - Get Invesco KBW Bank ETF Report is up 5% Wednesday.
Elsewhere, the U.S want to block Chinese airlines from flights to and from the U.S. U.S. airline stocks outperformed, with Delta (DAL) - Get Delta Air Lines, Inc. Report and United Airlines (UAL) - Get United Airlines Holdings, Inc. Report up 6.3% and 9.7%, respectively. These are high beta stocks, but they also could enjoy momentarily higher market share on account of this development, should it come to fruition.