US stocks close mixed on weak hiring data in private sector

U.S. stocks closed mixed on Wednesday as investors digested weaker-than-expected private-sector hiring data and remained cautious amid fresh U.S.-China trade tensions, following the implementation of a steep steel and aluminum tariff hike.

The Dow Jones Industrial Average dropped 91.90 points, or 0.22 percent, ending the session at 42,427.74, while the S&P 500 inched up 0.44 points, or 0.01 percent, to 5,970.81. The Nasdaq Composite gained 61.53 points, or 0.32 percent, to close at 19,460.49.

Sector performance was split, with six of the S&P 500's 11 major groups finishing higher. Communication services and materials led the way, rising 1.36 percent and 0.35 percent, respectively. On the downside, energy and utilities were the weakest performers, falling 1.89 percent and 1.70 percent.

Investor sentiment was dampened by the ADP National Employment Report, which showed private-sector hiring slowed significantly in May. Only 37,000 jobs were added, the weakest figure in over two years and far short of analyst expectation of 110,000 ones.

Further economic data reflected softening conditions. The Institute for Supply Management's Services Purchasing Managers' Index (PMI) fell to 49.9 in May, slipping into contraction territory for just the fourth time in five years. The reading came in below April's 51.6 and missed economist forecasts for an increase to 52, suggesting service sector growth is losing steam.

Jefferies economist Tom Simons wrote in a note to clients that the data likely reflect "more signs of a pause in activity rather than a steep contraction." "A broad pause is not a good thing, and the uncertainty that precipitated this pause has not shown any signs of lifting," he said.

Meanwhile, U.S. President Donald Trump lashed out at Fed Chair Jerome Powell on social media again, calling for immediate rate cuts.

Adding to market jitters, Trump's order to double tariffs on steel and aluminum imports to 50 percent took effect Wednesday, with only the United Kingdom exempted. The deadline also arrived for U.S. trading partners to submit "best offers" to avoid a broader wave of retaliatory tariffs slated for July.

Barclays' Head of U.S. Equity Strategy Venu Krishna said that recent market movement reflects a "broad realization" that the extreme tariff rhetoric may not fully materialize, though it continues to create uncertainty for investors. "The bottom line is that while uncertainty remains high around the eventual tariff outcome, the rate of change on policy headwinds has become much less onerous." Wilson said. "This has reduced recession risk and is giving corporates and consumers more confidence in the forward looking outlook."

The S&P 500 index will peak in the second quarter and then correct to the range of 5,250 points to 5,500 points in the second half of 2025, according to a presentation by Stifel on Tuesday.

Major technology companies showed mixed performance on Wednesday. Meta Platforms advanced 3.16 percent, while chipmaker Broadcom, set to release earnings on Thursday, gained 1.65 percent. Nvidia, Microsoft, Amazon, and Alphabet posted modest increases. In contrast, electric vehicle manufacturer Tesla dropped 3.55 percent, and Apple edged down slightly.