Traders work on the floor of the New York Stock Exchange during morning trading on April 07, 2025 in New York City.
Michael M. Santiago | Getty Images
The S&P 500 rose on Wednesday after President Donald Trump announced a U.S.-Vietnam trade deal. However, investor optimism was limited due to a new report showing private payrolls surprisingly decreased in June, raising concern over the state of the U.S. economy.
The benchmark index gained 0.2%, while the Nasdaq Composite advanced 0.7%. The Dow Jones Industrial Average traded around the flatline.
The S&P 500 saw a boost after the president posted about the deal between the two countries on Truth Social, though he provided no additional information on the agreement.
Earlier Wednesday, stocks came under some pressure after the latest report by ADP showed that the private sector lost 33,000 jobs last month. That marks the first monthly decline in ADP’s payrolls report since March 2023. Economists polled by Dow Jones expected payrolls to grow by 100,000.
“We, frankly, have been seeing a weakening of the labor market for months and months now, and I always wondered if it would take a negative payrolls print to get the [Federal Reserve] to pay a little bit more attention to the labor market as opposed to the inflation picture,” Ross Mayfield, investment strategist at Baird, told CNBC. “This is, on that front, what will hopefully catch some attention.”
The report comes with the stock market near record highs despite concerns that lingering trade tensions between the U.S. and other countries could slow U.S. and global economic growth.
To be sure, the ADP report has a lackluster record predicting the government’s monthly jobs report, which is due out Thursday. Economists expect growth of 110,000 jobs for June.
However, if the upcoming jobs data follows the ADP report in missing expectations, a Fed interest rate cut may be on the table when policymakers meet later this month, according to CFRA Research’s Sam Stovall. There’s already been growing expectations for the Fed lowering rates at its July meeting, as the CME Group’s FedWatch tool shows a roughly 25% chance of a cut, up from 20% a day before.
“If we end up having a fairly weak employment report, then that could allow the Fed to be cutting rates,” said Sam Stovall, chief investment strategist at CFRA Research. He also pointed out that Fed Chair Jerome Powell recently confirmed that the central bank would have cut rates by now if it weren’t for Trump’s tariff plans announced earlier this year.
“If that were the case then, it could be the case now, especially if you know we have weaker-than-expected employment data,” Stovall added.
Wall Street is coming off a mixed session, with the Dow surging 400 points, while the S&P 500 and Nasdaq closed lower after a broad decline in tech shares. The Dow got a boost as investors rotated into materials and health care stocks.
Traders were also keeping an eye on Trump’s tax-and-spending bill, which narrowly passed the Senate on Tuesday. The measure returns to the House, where there are still hold-outs among GOP lawmakers.
