S&P 500 Edges Higher To Fresh Record Amid Cautious Trading

U.S. equities extended their upward trajectory Wednesday, though trading remained subdued as market participants reassessed the recent rally. The S&P 500 climbed 13.31 points to 6,958.13, marking another record high intraday level and up 0.2 percent on the session. The tech-laden Nasdaq outperformed with a 0.6 percent advance, gaining 131.98 points to reach 23,679.15. Meanwhile, the Dow Jones Industrial Average retreated slightly, dropping 123.60 points or 0.3 percent to 49,338.48, despite hitting a fresh intraday record earlier in the trading day.

The modest performance reflected a pause following two consecutive sessions of solid gains that had propelled both the Dow and S&P 500 to fresh closing records on Tuesday. Market participants appeared to be taking a breather to evaluate the strength underlying the recent move higher.

Economic Data Mixed Signals

Employment figures provided a complicated narrative for investors to digest. According to payroll processor ADP, private sector jobs increased by 41,000 positions in December, falling short of the 47,000 jobs economists had projected. This followed a revised decline of 29,000 positions in November, initially reported as a loss of 32,000 jobs.

Job openings also disappointed, with the Labor Department reporting November openings fell more sharply than anticipated. Attention now turns to Friday’s official employment report, where analysts expect nonfarm payrolls to rise 60,000 jobs in December, down from the 64,000 gain posted in November. The unemployment rate is projected to ease to 4.5 percent from 4.6 percent.

A brighter spot emerged from service sector data. The Institute for Supply Management reported its services PMI jumped unexpectedly to 54.4 in December from 52.6 in November, reaching its strongest level since October’s 56.0 reading. Economists had forecast a decline to 52.3, with any reading above 50 signaling expansion.

Sector Divergence

Pharmaceutical equities demonstrated impressive strength, lifting the NYSE Arca Pharmaceutical Index up 1.9 percent to an intraday record. Software stocks also gained traction, with the Dow Jones U.S. Software Index rising 1.8 percent. Biotechnology shares similarly participated in the upside move.

Conversely, precious metals weakness pressured gold equities, sending the NYSE Arca Gold Bugs Index down 1.6 percent. Financial, computer hardware and utilities sectors also registered notable declines, offsetting gains elsewhere.

Global Markets

Asia-Pacific bourses delivered mixed results Wednesday. Japan’s Nikkei 225 fell 1.1 percent, while China’s Shanghai Composite edged higher by 0.1 percent and South Korea’s Kospi advanced 0.6 percent. European exchanges moved in different directions: the U.K.'s FTSE 100 declined 0.6 percent, contrasting with gains in France’s CAC 40 (up 0.2 percent) and Germany’s DAX (up 0.9 percent).

Fixed Income

Treasury prices moved higher on the back of the mixed economic backdrop. The yield on the ten-year benchmark note fell 3.5 basis points to 4.144 percent, reflecting demand for safe-haven securities.