REUTERS/Gonzalo FuentesRafael Nadal of Spain serves during his quarter-final match at the French Open in Paris June 4, 2014.
The S&P 500 made a new record high, though markets were calm as the recent pattern of exceptionally low volatility continued.
First, the scoreboard:
- Dow: 16,737.53 (+15.2, +0.1%)
- S&P 500: 1,927.88 (+3., +0.2%)
- Nasdaq: 4,251.64 (+17.5, +0.4%)
And now the top stories:
- The Federal Reserve released its latest Beige Book report, which showed that economic activity expanded in each of the central bank’s 12 regions during the most recent reporting period. The report said consumer spending expanded across almost all districts, and activity in the services sector, excluding finance, grew across most districts. The report also indicated that drought conditions continued to weigh on agriculture in the San Francisco and Dallas districts. You can read the Federal Reserve’s full statement here.
- ADP reported that private U.S. companies added 179,000 jobs in May, short of the 210,000 additions economists had been expecting. Following the report Moody’s Analytics’ Mark Zandi, said, “[t]he job market has yet to break out from the pace of growth that has prevailed over the last three years.” Pantheon Macro’s Ian Shepherdson reiterated his expectations for Friday’s nonfarm payrolls to show that the U.S. economy added 230,000 jobs in May. At Barclays, Cooper Howes also reiterated his view on Friday’s jobs report, continuing to expect an addition of 225,000 jobs in May.
- The U.S. trade deficit in April widened 6.9% to $46.2 billion, the largest deficit in two years. Pantheon Macro’s Ian Shepherdson said, “The April details are disappointing. All the headline damage is in the ex-petroleum deficit; net petroleum imports fell by $1.0B to a four-month low. But non-oil exports fell 0.2% while imports rose 1.2%. The ISM survey points to a much better export performance, so we hope for an improved performance in May. Exports should rebound and imports should correct to the downside; the 4.3% total increase in non-oil imports in Mar/Apr is unsustainable. Still, trade looks likely to be a small drag on Q2 GDP.”
- The Institute for Supply Management’s May survey of non-manufacturing activity climbed to 56.3, topping expectations for a 55.5 reading. Pantheon Macro’s Ian Shepherdson said, “[t]he increase in the headline index is reflected in modest gains in most of the sub-indexes, with business activity, orders and employment all rising. The latter climbed only 0.9 points to 52.4, consistent with payroll growth of only 160K. But the index has been an unreliable guide in recent months, and it is not consistent with the drop in jobless claims. The strength of the headline and business activity indexes reflects the robust retail sales numbers of the past couple of months — April was reportedly weak but March was very strong — and is consistent with our view that the May was good too. Finally, note prices paid up slightly to an 18-month high, consistent with other surveys.”
- Markit’s final U.S. services PMI reading for May came in at 58.1, a 26-month high. This reading was up from April’s 55.0 reading and roughly in-line with expectations for a 58.2 reading. Commenting on the report, Markit’s Chief Economist Chris Williamson said, “[t]he U.S. economy is moving into the summer with renewed vigor. The final PMI for May has come in slightly weaker than the earlier flash estimate but is yet another indication that business activity rebounded strongly in the second quarter.”
- The European Central Bank’s June meeting is set for tomorrow in Frankfurt, Germany. The ECB is widely expected to cut interest rates, taking its deposit facility rate into negative territory, and further trimming its benchmark rate from where it currently stands at 0.25%. A Bloomberg report, citing two euro-area central bank officials, said ECB President Mario Draghi is likely to indicate that any interest rate cut announced will not be the final one.