US close: Equities tide rises as Trump disembarks from climate accord

As Donald Trump pulled the US out of the Paris climate agreement the country's stock indices made like a rising sea level to set new record high water marks on the first day of June, boosted by a wave of data indicating the economy continues to head in the right direction.

The Dow Jones added 135.53 points or 0.65% to finish at a new record close of 21,144.18, while the Nasdaq Composite put on 48.31 points or 0.78% to hit its own record of 6,246.83 and the S&P 500 notched up a new high of 2,430.06 after increasing 18.26 or 0.76%.

After a strong employment report from the ADP, expectations have been heightened for Friday's official non-farm payrolls report, which should be the final element to nail on a rate rise from the Federal Reserve in this month's policy meeting.

But with markets already pricing in close to a 100% chance of a rate rise, there is reason to believe we could see a lower degree of volatility than usual, said analyst Joshua Mahony at IG.

US private sector firms added 253,000 new hires in May, comfortably beating the consensus forecast of 180,000 after a gain of 174,000 in the month before.

This stellar ADP number has set high expectations amid traders, said analyst Naeem Aslam at Think Markets.

"If we see that the labour market has improved further and wages are increasing, that would send an encouraging signal for the market. Given the raft of disappointing news we have seen on the US economy, not to forget that President Trump has pulled the US out of Paris Accord, I think traders could certainly do with good news."

He added: "Pulling out of Paris Accord shows that President Trump means business when he says something. Although, this is nothing, but a pure disaster if we look through the lens of global warming. This means that investors are going to look at fossil fuel once again and your traditional trades such as coal will become more popular."

The ADP also boosted the dollar against the euro, pound, aussie, kiwi and yen, with the dollar-spot index up 0.27% to $97.180.

The NFP could also raise expectations of a further hike as soon as September, said Michael Hewson at CMC Markets.

"The main puzzle for a lot of people given the number of jobs being added is the weak nature of wage growth which still remains lacklustre."

Manufacturing data on Thursday was encouraging, with growth sector unexpectedly improved in May, according to the US Institute for Supply Management.

The ISM's headline manufacturing index rose to 54.9 from 54.8 the month before, beating expectations for a reading of 54.5. The employment index and the new orders index both improved, though production index growth eased as well as the prices paid index.

Capital Economics said: "The ISM manufacturing index was little changed at a fairly healthy level in May and suggests that economic growth is still on track to rebound to 3% annualised in the second quarter."

Pantheon Macroeconomics said: "The core message here is that the industrial recovery continues at a very modest pace, following the end of the collapse in capex in the oil sector, and everything dependent on it."

Also buoying sentiment, the US Department of Energy reported a 6.4m barrel drop in the country's commercial stockpiles of crude oil.

But West Texas Intermediate was down 0.77% to $47.95 a barrel, around its lowest level in a fortnight.

In corporate news, Palo Alto shares surged as the computer security company reported better-than-expected quarterly results overnight.

Box Inc also racked up healthy gains at the open after the cloud content management company's first-quarter earnings late on Wednesday impressed investors.

Hewlett Packard Enterprise was on the back foot in early trade after it reported a quarterly loss overnight.

Goldman Sachs bounced back a tad, having fallen around 10% in the year to date, as a several financials stocks recovered after a sector dip the previous session.

Chemicals marker PPG Industries was in focus after it withdrew its offer for Dutch paint maker AkzoNobel, though investors seemed relieved and sent its shares up 2.6%.

Dow Jones - Risers

Unitedhealth Group Inc. (UNH) $179.58 2.51%
Goldman Sachs Group Inc. (GS) $215.01 1.78%
American Express Co. (AXP) $78.28 1.74%
Wal-Mart Stores Inc. (WMT) $79.81 1.54%
E.I. du Pont de Nemours and Co. (DD) $80.04 1.42%
General Electric Co. (GE) $27.72 1.24%
JP Morgan Chase & Co. (JPM) $83.07 1.11%
Home Depot Inc. (HD) $155.15 1.07%
McDonald's Corp. (MCD) $152.33 0.99%
Cisco Systems Inc. (CSCO) $31.82 0.92%