Wall Street climbs as tech boost offsets economic worries
NEW YORK: US stocks edged higher on Wednesday, as strength in technology shares offset declines driven by weak economic data that deepened concerns about the impact of the Trump administration's erratic trade policies.
The services sector contracted for the first time in nearly a year in May, while businesses paid higher input prices, a reminder that the economy was still at risk of experiencing a period of very slow growth and high inflation.
The ADP National Employment Report showed US private employers added the fewest number of workers in more than two years in May. Investors are awaiting Friday's nonfarm-payrolls data for more signs on how trade uncertainty is affecting the US labor market.
Washington doubled tariffs on imported steel and aluminum to 50% on Wednesday, the same deadline President Donald Trump had set for trading partners to make their best offers to avoid other punishing import levies from taking effect in early July.
Investor focus is squarely on tariff negotiations between Washington and its trading partners, with Trump and Chinese leader Xi Jinping expected to speak sometime this week as tensions simmer between the world's two biggest economies.
'If we can't get to an agreement on China, the tariff battle will be a headline issue for many months to come and will have an impact on both domestic and international economies,' said Phil Blancato, CEO of Ladenburg Thalmann Asset Management.
May was the best month for the S&P 500 index and the tech-heavy Nasdaq since November 2023, thanks to a softening of Trump's harsh trade stance and upbeat earnings reports.
The S&P 500 remains less than 3% away from record highs touched in February.
Barclays joined a slew of other brokerages in raising its year-end price target for the S&P 500, pointing to easing trade uncertainty and expectations of normalized earnings growth in 2026.
At 11:56 a.m. ET, the Dow Jones Industrial Average rose 40.62 points, or 0.10%, to 42,560.26, the S&P 500 gained 10.64 points, or 0.18%, to 5,981.00 and the Nasdaq Composite gained 54.24 points, or 0.28%, to 19,453.20. Six of the 11 major S&P 500 sub-sectors rose, led by communication services with a 0.8% rise.
Shares of Hewlett Packard Enterprise rose 1.8% as demand for the company's artificial-intelligence servers and hybrid cloud segment helped it beat estimates for second-quarter revenue and profit.
GlobalFoundries rose 2% after the chip manufacturer announced plans to increase its investments to $16 billion.
Tesla dropped nearly 3%. The electric-vehicle maker's sales dropped for the fifth straight month in big European markets.
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