Stocks ended lower, but at a low, on Thursday after private payrolls in the U.S. In May rose the most in nearly a year and investors weighed in on a report that said President Joe Biden may be open to a corporate tax rate of less than 28%.
The Dow Jones Industrial Average closed 23 points, or 0.07%, at 34,577, the S&P 500 was down 0.36% and the Nasdaq fell 1.03%.
The US economy added 978,000 jobs last month, according to ADP’s National Employment Report. That stronger-than-expected total could fuel concerns about wage inflation as the economy recovers from the coronavirus pandemic.
Meanwhile, the number of Americans filing for unemployment benefits for the first time fell for the fifth week to 385,000, dropping to less than 400,000 for the first time since the pandemic.
The Labor Department will release the May nonfarm payroll report on Friday. Economists surveyed by FactSet estimated that the United States added 650,000 jobs in May following an April increase of 266,000 fewer than expected.
The Washington Post reported that Biden offered to create a 15% tax floor for businesses, rather than raising the corporate tax rate to 28%.
“With ADP removing it from the park, and unemployment claims breaking the 400,000 barrier, a pandemic low, all eyes will be on the broader employment landscape (Friday),” said Mike Loewengart, managing director of investment strategy at E-Trade.
“Given that apparently all systems are on the jobs front, the economy is showing some very real signs that this is not just a comeback, expansion mode could be on the horizon.
“So what does that translate into? Probably more pressure on the (Federal Reserve) to make a move, perhaps sooner than many thought from the start,” Loewengart added. “All that said, keep in mind that jobless claims are not where they were before the pandemic, which could dampen any action by the Fed.”
Investors have been watching closely for signs of inflation and signs of whether the Fed could slow the recovery in the US economy earlier than expected. On Thursday, the Institute for Supply Management reported that its services index expanded at the fastest pace recorded in May.
Fed officials have repeatedly said that it is too early to withdraw support for an economy that is just beginning to recover from the COVID-19 pandemic.
But Philadelphia Fed Chairman Patrick Harker said Wednesday that the central bank should soon begin discussing the timeline for reducing its $ 120 billion a month bond buying program.
“I think it’s appropriate for us to slowly and carefully reverse our purchases at the appropriate time,” Harker said during a virtual Women in Housing and Finance event. “When that is so, it is something we have to start discussing.”
AMC entertainment (AMC) – Get report ended with an 18% drop after announcing that it was presented to sell up to 11.55 million shares.
The stock was on the rise before the announcement, a day after the chain of cinemas and the favorite of meme stocks soared to an all-time high.
AMC on Thursday warned investors against buying shares “unless you are prepared to risk losing all or a substantial part of your investment.”
Jim Cramer, the founder of TheStreet, said Wednesday that he believes AMC is now in “overrated” territory. The stock gains have come amid intensifying competition in the domestic content streaming market and the impact of COVID-sparked restrictions on public gatherings around the world.