Wall Street higher after data raises rate cut hopes; Fed minutes eyed
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Jobs data points to easing labor market
ISM services PMI weaker than expected
Paramount jumps on report of Skydance Media deal
First Foundation slumps after capital raise
Indexes up: Dow 0.04%, S&P 0.18%, Nasdaq 0.18%
Updated at 10:06 a.m. ET/1406 GMT
By Ankika Biswas and Lisa Pauline Mattackal
July 3 (Reuters) - U.S. stock indexes edged higheron Wednesday in a holiday-shortened trading session, as data pointing to a softening economy raised hopes for a September start to the Federal Reserve's policy easing.
The equity market will close early on Wednesday and stay shut on Thursday on account of U.S. Independence Day, keeping trading volumes thin throughout the week.
Both theADP Employment report and weeklyjobless claims data pointed to easing labor market conditions, a welcome signal ahead of Friday's closely watched non-farm payrolls report. Markets hope signs of weakness in the labor market will boost chances of the Fed cutting interest rates.
"It's quite a strong unemployment claims number, and it's fitting in with an overall trend that's probably an indication of loosening up in the jobs market. It must be quite welcoming for the Fed," said David Morrison, Trade Nation senior market analyst.
Additionally, PMI data from the Institute for Supply Management was weaker than expected, and factory orders unexpectedly slumped, strengthening the case for easing policy.
Wednesday's data prompted market participants to boost bets of a September rate cut to over 70%,as per LSEG's FedWatch.<FEDWATCH>
The Fed'sJune meeting minutes are due later in the day.
Tesla TSLA.O jumped 3.9%, trading at a near six-month high after a more than 10% gain on Tuesday following a smaller-than-expected drop in second-quarter vehicle deliveries.
The Philadelphia SE Semiconductor Index .SOX rose 0.5%, helped by gains in the U.S. listing of Taiwan SemiconductorManufacturing TSM.N and Broadcom AVGO.O, which rose 2.0% and 1.8%.
However, megacaps NvidiaNVDA.O, Alphabet GOOGL.O, Microsoft MSFT.O, and Amazon.com AMZN.O slipped between 0.1% and 1%.
On the other hand, an index of smallcap stocks .RUT was0.4% higher, while the economically sensitive materials .SPLRCM and utilities .SPLRCU S&P 500 subsectors were up0.9% and 1.1%.
"The tendency at the moment is towards rotation ... we have quite a few days where we see the Russell down, and tech up and vice versa," Morrison said, though noting that the market's optimism around megacap tech stocks was still strong.
As the S&P 500 has jumped over 15% in the first half of 2024, largely supported by top-tier high momentum technology-related stocks, the benchmark index's equal-weighted counterpart .SPXEW only rose 5% and small and mid-cap stocks have significantly lagged.
At 10:06 a.m. ET, the Dow Jones Industrial Average .DJI was up 14.44 points, or 0.04%, at 39,346.29, the S&P 500 .SPX was up 9.83 points, or 0.18%, at 5,518.84, and the Nasdaq Composite .IXIC was up 32.02 points, or 0.18%, at 18,060.78.
Among other movers, Paramount Global PARA.O jumped 10% after Shari Redstone's National Amusements reached a preliminary deal to sell its controlling interest in the media giant to David Ellison's Skydance Media.
Lender First Foundation FFWM.N shed 24.7% after the company, which holds a huge portfolio of multifamily real estate loans,disclosed a $228 million unexpected capital raise.
Advancing issues outnumbered decliners by a 3.43-to-1 ratio on the NYSE and by a 1.73-to-1 ratio on the Nasdaq.
The S&P index recorded 13 new 52-week highs and threenew lows, while the Nasdaq recorded 25 new highs and 65 new lows.
Reporting by Ankika Biswas and Lisa Mattackal in Bengaluru; Editing by Maju Samuel
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