MARKET SNAPSHOT

U.S. stocks were mixed as ISM services activity unexpectedly contracted in May, while ADP data showed the slowest pace of private-sector hiring in more than two years. A string of disappointing data, coupled with a sobering Beige Book, drove Treasury yields to their lowest settlement in nearly a month. Oil futures gave back some of this week's gains in a volatile session. Gold prices rose as the dollar weakened.

MARKET WRAPS

EQUITIES

Bonds rallied and stocks finished mixed after weak economic data boosted investors' confidence that the Federal Reserve will cut interest rates in coming months.

Services activity unexpectedly contracted in May, according to the Institute for Supply Management purchasing managers index, while ADP data showed just 37,000 jobs were created, the slowest pace of private-sector hiring in more than two years.

The lackluster readings on the U.S. economy made some investors think the central bank is slightly more likely to begin lowering rates in the near future.

The major U.S. stock indexes ended the session mixed. The tech-heavy Nasdaq Composite led the way higher with a gain of 0.3%, while the S&P 500 added less than 0.1%. The Dow Jones Industrial Average slipped 0.2%.

The slightly softer economic data "increased the expectations that you'll see more rate cuts from the Fed this year," said Sinead Colton Grant, chief investment officer at BNY Wealth. "And that's supportive for stocks."

Earlier Wednesday, China's benchmark Shanghai Composite gained 0.4%. The Shenzhen Composite Index added 0.9% while the tech-heavy ChiNext Price Index rose 1.1%.

Japan's Nikkei Stock Average climbed 0.8%, led by machinery and chip stocks.

Stocks in Australia rose, as the S&P/ASX 200 increased 0.9%, the second consecutive session of gains.

New Zealand stocks climbed, boosting the S&P/NZX 50 Index by 1.4%.

COMMODITIES

Oil futures gave back some of this week's gains in a volatile session.

The 4.3 million barrel drawdown in U.S. crude inventories was offset by bigger-than-expected increases in gasoline and diesel stocks.

Aramco cut its official July selling price to Asia by 20 cents a barrel, but raised prices for Europe and the U.S., while a report that Saudi Arabia favors further large monthly OPEC+ output increases after July added downward pressure on oil.

President Trump said the U.S. needs a definitive answer soon from Iran on a nuclear deal.

WTI gave back 0.9% at $62.85 a barrel, and Brent fell 1.2% to $64.86 a barrel.

Gold prices gained as comments from President Trump instilled some new economic worries heading into the summer.

Trump posted on his Truth Social account that China's President Xi was "extremely hard to make a deal with," and also demanded Fed Chair Jerome Powell lower interest rates.

"His comments suggest that a less-than-expected compromise may be on the horizon," said Peter Cardillo of Spartan Capital Securities.

Front-month gold futures put on 0.7% to settle at $3,373.50 a troy ounce, making it the second session out of the past three that gold has finished higher.

TODAY'S TOP HEADLINES

U.S. Services-Sector Activity Unexpectedly Contracts as Tariffs Raise Uncertainty

Activity among U.S. services firms sank unexpectedly in May, pointing to mounting uncertainty and price pressures for businesses prompted by President Trump's tariff policies.

The Institute for Supply Management said Wednesday that its purchasing managers' index for services providers fell to 49.9 in May, from 51.6 in April, in contrast to the small rise to 52.1 expected by economists polled by The Wall Street Journal.

The reading below 50 points to a first contraction in activity since June 2024. It was only the fourth time under the 50-mark in the 60 months since the pandemic-induced recession began in June 2020, ISM said.

Trump Megabill Would Expand Deficits by $2.4 Trillion, CBO Estimates

WASHINGTON-President Trump's tax-and-spending megabill would increase budget deficits by $2.4 trillion over the next decade, compared with doing nothing, according to a Congressional Budget Office estimate released Wednesday.

The number underlines Republicans' challenge in selling the measure as fiscally sound. The GOP-controlled House passed the legislation last month, and the CBO score was released just as Republican senators are making demands with additional price tags that will test party leaders' ability to cobble together a version that can get to Trump's desk quickly.

U.S. economy stalled in May, Fed survey finds

The U.S. economy slowed to a crawl in May, with consumers pulling back on spending and businesses delaying hiring, according to the Federal Reserve's Beige Book survey released Wednesday.

According to the report, nine of the 12 Fed districts reported contraction in economic activity or no change in growth. The remaining districts saw slight growth.

Business contacts across the country said consumers were not spending and described labor markets as "flat."

Weakest ADP jobs report in two years points to hiring freeze tied to trade wars. Is the worst over?

Privately run businesses created just 37,000 new jobs in May - the smallest increase in more than two years - as the worst global trade wars since the 1930s spurred many firms to put a pause on hiring.

The small increase in private-sector jobs last month, as reported by payroll processor ADP, was far lower than expected. Economists surveyed by the Wall Street Journal had forecast a 110,000 gain.

"After a strong start to the year, hiring is losing momentum," said Nela Richardson, chief economist at ADP.

Reddit Sues Anthropic, Alleges Unauthorized Use of Site's Data

Reddit is suing AI startup Anthropic for using the online discussion site's data without a licensing agreement, a new front in the battle over how artificial-intelligence companies train their models.

Reddit said the AI company unlawfully used Reddit's data for commercial purposes without paying for it and without abiding by the company's user data policy, according to the complaint, which was filed Wednesday in California.

Expected Major Events for Thursday

01:00/PHI: May CPI

01:30/AUS: Apr International Trade in Goods & Services

01:45/CHN: May China Services PMI

02:00/JPN: May Imported Vehicle Sales

05:00/SIN: Apr Retail Sales

08:00/TAI: May Price Indexes: Consumer Prices $(CPI.UK)$

08:20/TAI: May International Reserves

23:30/JPN: Apr Household Spending

23:50/JPN: May Provisional Trade Statistics for 1st 20 days of Month

23:50/JPN: May International Reserves / Foreign Currency

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(END) Dow Jones Newswires

June 04, 2025 17:00 ET (21:00 GMT)

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