Stock futures tick down, pausing after rally

Stock futures opened slightly lower Wednesday evening, pausing after a rally sent US equities to their highest level in three months.

The S&P 500 closed out its longest winning streak since early February by Wednesday’s close, posting a fourth straight session of gains and settling at the highest level since March 4. The industrials, financials and energy sectors – the laggards for the year to date – led advances, while the technology companies that had previously powered the indices higher lagged. The rotation underscored investors’ increasing confidence across industries with an economic reopening under way.

Market participants mostly shrugged off ongoing unrest across the nation as mass gatherings continued for another day, along with more signs of tensions between the U.S. and China.

A closely watched monthly report on changes in private payrolls showed far fewer than expected job losses in May, fueling hopes that the labor market was recovering from a nadir in April. The ADP report showed 2.76 million private payrolls lost in May, or less than one-third the 9 million cuts expected.

“The unexpectedly small 2,760K drop in the ADP measure of May private payrolls is consistent, at least, with the idea that the partial reopening of several states in the early part of the month prompted an immediate wave of rehiring,” Ian Shepherdson, chief economist for Pantheon Macroeconomics, said in a note.

Still, he said, he urged “caution before assuming” the Labor Department’s official jobs report out Friday will be in-line with ADP’s results due to differences in how the two surveys count furloughed workers, with ADP generally including furloughed workers still on employee lists as employed. Consensus economists expect the Labor Department report will show non-farm payrolls dropped by a net 8 million in May, including a loss of 7.25 million private payrolls, after a decline of more than 20 million in April. The unemployment rate is expected to worsen to 19.5% from 14.7%.

Signs that the coronavirus outbreak was easing also helped boost investors’ risk appetites. The daily death toll from the coronavirus in New York state fell below 50 on Wednesday, hitting the lowest level in more than two months. Seven regions in the state, all outside of New York City, will reopen outdoor dining at restaurants Thursday, Governor Andrew Cuomo’s said in a press conference. New York City is poised to begin the first phase of its reopening process Monday.

Across the U.S., new coronavirus cases rose by 1.2% between Tuesday and Wednesday, about matching the average pace of increase of the past seven days, according to Bloomberg and Johns Hopkins data.

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6:03 p.m. ET Wednesday: Stock futures open slightly lower

Here were the main moves at the start of the overnight session for U.S. equity futures, as of 6:03 p.m. ET:

• S&P 500 futures (ES=F): 3,112.75, down 5 points (-0.16%)

• Dow futures (YM=F): 26,225.00, down 3 points (-0.01%)

• Nasdaq futures (NQ=F): 9,679.50, down 5.25 points (-0.05%)

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