The S&P 500 and the Dow Jones Industrial Average swung between losses and gains on Wednesday after a strong private hiring report raised the odds of an interest rate hike next week, lifting bank stocks while dragging rate-sensitive sectors. The ADP National Employment report showed the US private sector added 298,000 jobs last month, far bigger than 190,000 that economists on average had estimated.
The data acts a precursor to Friday's nonfarm payrolls report, which includes private and public sector jobs and acts as a barometer of the US economy. The S&P 500 financial index was up 0.63 percent, led by big banks such as Citigroup, Bank of America and Wells Fargo. However, the impact was offset by a 1 percent decline in high-dividend paying utilities and real estate sectors.
"Equities are at the crossroads of optimism and concern and are likely to go sideways until we get greater clarity from the Fed and legislative action," said Terry Sandven, chief equity strategist at US Bank Wealth Management in Minneapolis. Investors are also digesting a strong post-election rally that has driven the main indexes to record highs, sparking some concern over market valuations. The S&P 500 is trading at about 18 times forward earnings estimates against the long-term average of about 15 times, according to Thomson Reuters data.
At 10:58 am ET (1558 GMT), the Dow was down 6.88 points, or 0.03 percent, at 20,917.88 and the S&P 500 was up 2.5 points, or 0.11 percent, at 2,370.89. The Nasdaq Composite was up 22.15 points, or 0.38 percent, at 5,856.08, boosted by gains in Microsoft and Alphabet.