By Carlo Versano
Major indices opened higher on Wednesday for a second straight day, still chugging along after Fed Chair Jerome Powell made comments Tuesday that many investors saw as a sign the central bank could lower interest rates soon to combat pressure from tariffs.
The Dow opened higher by triple digits before paring some of those gains after a dismal private payroll report. Private employers added just 27,000 jobs in May compared to estimates of 173,000.
That data point will add to the bears who believe the U.S. economy is at the tail-end of its decade-long expansion. But in the short term, Powell's comments combined with signs of a GOP revolt over President Trump's new tariffs against Mexico were enough to keep the bullish momentum going, said Danielle Shay, director of options and trader specialist at Simpler Trading.
The reports that Republican senators were nearly unanimously opposed to the Mexico tariff plan gave investors hope a revolt could stall the first tariff, due to kick in next week. It was a "positive catalyst" that led to a short squeeze which "pushed prices up incredibly high, very fast," Shay said.
"This is a positive vote for the bulls," she said. Though the headwinds from the trade war with China and the uncertainty over the trade relationship with Mexico is still casting a shadow on the markets. If those tariffs continue, "it's going to be a huge problem" for the economy at a macro level, according to Shay.
She said that's why she's investing in high-growth industries with limited exposure to international trade, such as cloud computing and cyber security. She pointed to Salesforce ($CRM), CyberArk ($CYBR) and Palo Alto Networks ($PANW) as individual names she likes.
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