US Stock Market Overview – The Dow Hits Fresh All-time Highs as All Sectors Rallied

The Dow Jones Industrial Average closed at a record high on Wednesday, its first new high in nine months. This follows several days of the S&P 500 notching up fresh highs, which also occurred on Wednesday. Softer than expected US data which included both private payrolls and ISM services weighed on Treasury yields which helped buoy riskier assets such as stocks. The Dow rallied more than 170 points during a shortened trading session ahead of Thursday’s July 4th Independence Day holiday, The Dow was the last of the three major indexes to notch a record this year. All sectors were higher in the S&P 500 driven by consumer cyclicals and financials. Energy was the worst performing sector in an up tape.

Crude Oil Rebounds on Inventory Draw

US crude oil inventories decreased by 1.1 million barrels from the previous week. Gasoline inventories decreased by 1.6 million barrels last week and are at the five year average for this time of year. Distillate fuel inventories increased by 1.4 million barrels last week and are about 6% below the five year average for this time of year. Total commercial petroleum inventories increased last week by 2.5 million barrels last week.

ADP Private Payrolls Miss Expectations

Private employment was weaker than expected in June according to Wednesday private payroll report. Companies adding just 102,000 new positions, according to ADP. Expectations were for private payrolls to increase by 135,000. This comes following May job growth of 41,000. This comes ahead of Friday’s government jobs report which is expected to show growth of 165,000 after May’s lackluster 75,000.

Small businesses continue to face an uphill battle. Companies with fewer than 50,000 employees saw another setback in June, with payrolls falling by 23,000 after a decline of 52,000 the previous month. Businesses with fewer than 20 employees were particularly hard-hit, subtracting 37,000 jobs. Companies with 50 to 499 employees posted growth of 60,000, while large businesses added 65,000.

Job creation was fairly strong for large businesses. Companies with 50 to 499 employees posted growth of 60,000, while large businesses added 65,000. At the industry level, goods producers on net lost 15,000 jobs. Construction fell by 18,000 while natural resources and mining lost 4,000. Manufacturing added 7,000. Service-related industries provided all the job growth, adding 117,000 positions. Education and health services led the way with 55,000 and professional and business services contributed 32,000 to the total. Trade, transportation and utilities added 23,000 though leisure and hospitality rose by just 3,000 after adding 16,000 in May. Franchises grew by 13,500.

ISM Services Drop to 2-year Lows

The Institute of Supply Management service-oriented index slipped to 55.1% last month from 56.9% in May, the Institute for Supply Management said Wednesday. Services make up the large majority of jobs created in the United States which is an ominous sign. That matched the lowest reading since July 2017. This is a forward looking index which points to softening in the US economy.