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U.S. Stocks May Extend Yesterday's Rally

wallstreet oct25 05jun19 lt

Stocks futures have given back some ground in recent trading but currently continue to point to a higher open on Wall Street. The Dow futures are up by 69 points, suggesting stocks may extend the substantial rally seen in the previous session.

The futures pulled back following the release of a report from payroll processor ADP showing much weaker than expected private sector job growth in the month of May.

ADP said private sector employment edged up by 27,000 jobs in May after spiking by a downwardly revised 271,000 jobs in April.

Economists had expected employment to increase by 180,000 jobs compared to the jump of 275,000 jobs originally reported for the previous month.

"Job growth is moderating," said Mark Zandi, chief economist of Moody's Analytics. "Labor shortages are impeding job growth, particularly at small companies, and layoffs at brick-and-mortar retailers are hurting."

Overall sentiment remains modestly positive, however, as traders continue to react to Federal Reserve Chairman Jerome Powell's pledge to sustain the U.S. economic expansion.

Citing uncertainty surrounding trade negotiations and other matters, Powell said the central bank will act "as appropriate" to support the economy.

Powell's comments were widely seen as an indication the Fed is prepared to discuss lowering interest rates if escalating global trade disputes weigh down economic growth.

Not long after the start of trading, the Institute for Supply Management is due to release its report on activity in the service sector in the month of May.

The ISM's non-manufacturing index is expected to come in unchanged in May after dipping to 55.5 in April, with a reading above 50 indicating growth in the service sector.

Stocks moved sharply higher over the course of the trading day on Tuesday, rebounding following the steep drop seen over the past several sessions. With the rally, the Nasdaq and the S&P 500 bounced off the multi-month closing lows set on Monday.

The major averages saw further upside going into the close, reaching new highs for the session. The Dow soared 512.40 points or 2.1 percent to 25,332.18, the Nasdaq spiked 194.10 points or 2.7 percent to 7,527.12 and the S&P 500 surged up 58.82 points or 2.1 percent to 2,803.27.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan's Nikkei 225 Index jumped by 1.8 percent, while Hong Kong's Hang Seng Index rose by 0.5 percent.

Meanwhile, the major European markets have turned mixed on the day. While the German DAX Index has edged down by 0.1 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index are both up by 0.2 percent.

In commodities trading, crude oil futures are sliding $0.81 to $52.67 a barrel after rising $0.23 to $53.48 a barrel on Tuesday. Meanwhile, after inching up $0.80 to $1,328.70 an ounce in the previous session, gold futures are spiking $19.60 to $1,348.30 an ounce.

On the currency front, the U.S. dollar is trading at 107.96 yen compared to the 108.15 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is valued at $1.1294 compared to yesterday's $1.1252.

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