Stocks Jump on Patrick Harker’s Dovish Remarks

Stocks advanced this morning, spurred by the House’s approval of a debt ceiling bill to stave off a potential U.S. default. With this vital move, the bill is now set for an inevitable passing Senate vote.

The Nasdaq Composite climbed 1.1% and the Dow Jones Industrial Average bolstered its position with an uptick of 202 points, translating to a 0.6% rise. The S&P 500 didn’t lag, registering a 0.9% gain of its own.

This surge in market activity came as the Fiscal Responsibility Act cleared the House with a 314-117 vote, reflecting bipartisan support. Senate Majority Leader Chuck Schumer pledged that the Senate would not adjourn until the bill gets a presidential signature, keeping market jitters in check.

But market watchers weren’t merely focused on the debt ceiling issue; their sights were also set on the Federal Reserve’s policy meeting scheduled for June 13-14. Philadelphia Fed President Patrick Harker – a voting FOMC member – hinted at a possible rate pause this morning, though Friday’s payrolls data could sway his decision. Rate hike odds fell significantly following Harker’s remarks according to the CME Group’s FedWatch Tool, which pumped up gold prices significantly following weeks of selling. A strong jobs report tomorrow would likely snap rate hike odds higher again, fading the gold rally.

Indeed, labor market data remains a central theme for investors. ADP data revealed this morning that private payrolls for May outpaced economists’ predictions, adding 278,000 jobs against an expected 180,000. Last week’s jobless claims undershot forecasts, too.

If tomorrow’s jobs number beats estimates, labor strength is expected to weigh on markets. “Good news is bad news” is back when it comes to jobs with more rate hikes potentially on the table.

“A lot of the market focus is shifting from whether the government is going to default on its debts, which was never going to happen, to the more pressing issue of how much further interest rates are going to rise,” said Harris Financial managing partner Jamie Cox.

Oil prices surged today as well amid anticipation of Sunday’s upcoming OPEC+ meeting. This surge comes despite the Energy Information Administration’s report of a 4.5 million-barrel increase in U.S. crude inventories for the week ending May 26.

OPEC+ is expected to discuss production levels and potentially slash barrels further to protect prices from an economic slowdown. The group of oil-producing nations has banned several major news outlets from attending the meeting. This air of secrecy has led many analysts to predict a production cut.

July West Texas Intermediate crude futures rose $2.81 (+4.1%), settling at $70.90 a barrel on the New York Mercantile Exchange. Meanwhile, August Brent crude futures increased by $2.49 (+3.4%), trading at $75.09 a barrel on ICE Futures Europe. Market participants eagerly await the OPEC+ meeting outcome, aware that it could potentially redraw the oil market landscape.

But really, it’s all about tomorrow’s jobs report, which could shut this recent rally down in a hurry with an uncomfortably strong payroll gain. On the other hand, a “Goldilocks” report – not too strong, not too weak – may just be enough to finally push the S&P past 4,200 after weeks of failing to do so.


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