S&P 500 Notches Sixth-Straight Record Close Ahead of Monthly Jobs Report

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Investing.com – The S&P 500 stretched its run of record daily closes to six on Thursday, boosted by energy on rising oil prices as major oil producers delayed their meeting by a day, while positive labor data buoyed expectations for a strong monthly jobs report due Friday. 

The S&P 500 rose 0.52% to close at a record of 4,319.94. The Dow Jones Industrial Average jumped 0.38%, or 138 points, the Nasdaq was up 0.13%. 

OPEC+ delayed its meeting by one day to Friday after a key member, the United Arab Emirates, was unwilling to go along with the reported preliminary deal – a 0.5 million barrel per day hike – agreed to by Saudi Arabia and Russia on Thursday. The delay casts doubt on whether the major oil producers will be able to reach a consensus on a production hike.     

Oil prices remained hit their highest level since October 2018 as investors bet that potentially higher output will be absorbed comfortably by an undersupplied market amid robust demand.  

“In our opinion, such an increase [of 500,000 barrels per day in August] would hardly be able to prevent a further rise in oil prices given that OPEC estimates that the market will be 1.9 million barrels per day short in the second half of the year…,” Commerzbank (DE:CBKG) said in a note ahead of the decision.

The backdrop for cyclical stocks – those that move in tandem with economy – including energy was also supported by strength in the labor market ahead of the Friday’s monthly jobs numbers.

“We forecast nonfarm payrolls rose 620,000 in June following a 559,000 rise in May as we think employers ramped up recruitment efforts and increased compensation to draw people back into employment,” Morgan Stanley (NYSE:MS) said in a note.

Wages will likely be heavily scrutinized as companies are expected to have to pay up in order to attract employees, particularly in the services sector, at a time when the unemployment benefits has played a role in adding to labor supply shortage.   

“In this jobs report coming up Friday, there’ll be a big focus on the wage component of the data, not just the [headline] number,” John Ragard, senior portfolio manager, small cap equity at Spouting Rock Asset Management told Investing.com in an interview on Wednesday.  “In previous reports, there really wasn’t a significant lift off in wage increases […] the May report showed about 2% increase in hourly wage growth.”

“[W]e’re going to start seeing bigger increases in the hourly wage rate as we move through the summer and into the fall, just because that’s what’s needed to pull people back into the service sector,” Ragard added.

Tech, meanwhile, was hurt by a weaker semiconductor stocks, paced by a decline in Micron (NASDAQ:MU).

Micron fell nearly 6% as the some on Wall Street sound the alarm on the peak pricing, pointing to an easing supply shortage in the second half of the year.

Summit downgraded Micron to hold from buy, and said the peak will be brought on by the seasonal build in the chipmaker’s memory supply and customers switching inventory management to just-in-time from just-in-case inventory management.

Megacap tech, meanwhile, offered little to the broader market advanced as the fab 5 remained mostly lower.

Apart from Facebook (NASDAQ:FB), Google-parent Alphabet (NASDAQ:GOOGL), Microsoft (NASDAQ:MSFT, Apple (NASDAQ:AAPL), and Amazon.com (NASDAQ:AMZN) were in the red.

In other news, Coinbase Global (NASDAQ:COIN) fell more than 4% after Mizuho said it remained on sidelines, reiterating its neutral trading as weaker cryptocurrency trading volumes are expected to weigh on crypto exchange’s growth for the remainder of 2021. 

On the political front, Treasury Secretary Janet Yellen said a  group of 130 countries has agreed to a global minimum tax on corporations as part of a broader agreement to revamp international tax laws.

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