Stocks rose on Wednesday on the back of coronavirus vaccine hopes and strong earnings from Disney. However, gains were capped as July private payrolls data disappointed and lawmakers continued negotiations on a new virus stimulus package.
The Dow Jones Industrial Average gained 356 points, or 1.3%. The S&P 500 advanced 0.7% and the Nasdaq Composite advanced 0.3% to a record high. Both the Dow and S&P 500 were on pace to post their fourth consecutive daily gains. The Nasdaq was headed for a six-day winning streak.
Johnson & Johnson announced it struck a $1 billion deal with the U.S. government to manufacture 100 million doses of its coronavirus vaccine candidate if it proves successful. J&J shares rose 0.9%. Novavax shares jumped 14.3% after the company reported phase one vaccine trial results that showed a positive immune response among patients.
Better-than-expected earnings from Disney also helped sentiment on Wall Street. The theme park and media giant earned a profit of 8 cents per share, while analysts expected a loss of 64 cents per share. Disney said it now has 100 million paid subscribers across its streaming services, which include Disney+, Hulu and ESPN+.
Disney shares popped 10.7%.
ADP payrolls data disappoints
ADP reported Wednesday that private payrolls in the U.S. increased by just 167,000 in July. That’s well below a Dow Jones estimate of 1 million and represents a tumble from the 4.314 million added in June.
The ADP report is seen as a preview to the government’s monthly jobs report, which is forecast to show a gain of more than 1.2 million jobs’
The final read on July Services PMI will be released at 9:45 am ET. Economists polled by Dow Jones are expecting a read of 49.6, the same as June. Finally, the ISM nonmanufacturing survey is set to release at 10:00 ET. Economists estimate a red of 55, according to Dow Jones, down from June’s read of 57.1.
Traders also grappled with continuing talks in Washington over a new coronavirus stimulus package.
The White House and Democratic congressional leaders have reported some progress in the negotiations, but they remain apart on some issues.
“The bottom line is that if we do see real disappointment in stimulus or the vaccine, then a 10% correction is the likely best-case scenario, and it’ll come quickly,” said Tom Essaye of The Sevens Report, in a note. “We cannot be complacent.”
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