By Chibuike Oguh
NEW YORK (Reuters) -The S&P 500 and Nasdaq indexes hit record closing highs on Wednesday, powered mainly by technology stocks as markets digested economic data that could support a much-expected start to the Federal Reserve's policy easing cycle.
Technology stocks led advances among the 11 S&P 500 sectors, followed by equities in communications and industrials sectors. Consumer staples stocks were the biggest losers.
The May private payrolls report on Wednesday was the latest data to suggest an easing in labor market tightness that could propel the Fed to begin cutting rates this year. A report on Tuesday showed job openings fell in April to the fewest in more than three years.
"We're seeing the economic data starting to ease up a little bit and the repercussions for that is that you're seeing the pressure on rates come off the boil a little bit mixed in with the potential for weaker economic data, which is a pretty good recipe for the bond market," said Jack Janasiewicz, a portfolio manager at Natixis Investment Managers Solutions in Boston.
Traders now see a nearly 69% chance of a September rate reduction, according to the CME's FedWatch tool. Expectations had hovered around 50% last week.
U.S. 10-year Treasury yields fell to a two-month low on Wednesday after a report pointed to weaker-than-expected job growth ahead of Friday's highly anticipated government employment report for May.
The Dow Jones Industrial Average rose 96.04 points, or 0.25%, to 38,807.33, the S&P 500 gained 62.69 points, or 1.18%, to 5,354.03 and the Nasdaq Composite gained 330.86 points, or 1.96%, to 17,187.91.
The S&P 500's previous record-high close was 5,321.41 on May 21, and the Nasdaq's previous record close was 17,019.88 on May 28.
Chip stocks leapt 4.5%, buoyed by gains to Nvidia (NASDAQ:NVDA) and Taiwan Semiconductor Manufacturing.
Nvidia's market valuation hit the $3 trillion mark for the first time as the chipmaker overtook Apple (NASDAQ:AAPL) to become the world's second-most valuable company.
Hewlett Packard Enterprise (NYSE:HPE) rose 10.7% after forecasting third-quarter revenue above Street expectations, helped by upbeat demand for its AI servers.
Dollar Tree (NASDAQ:DLTR) slipped 4.9% after a disappointing quarterly profit forecast. The budget retailer said it would explore options that include a potential sale or spinoff of Family Dollar.
Intel (NASDAQ:INTC) gained 2.5% after buyout firm Apollo Global Management (NYSE:APO) agreed to purchase a 49% equity interest for $11 billion in a joint venture related to the chipmaker's Ireland manufacturing unit.
CrowdStrike Holdings (NASDAQ:CRWD) jumped 11.9% after forecasting second-quarter revenue above estimates when markets closed on Tuesday.
Advancing issues outnumbered decliners by a 2.39-to-1 ratio on the NYSE. On the Nasdaq, 2,759 stocks rose and 1,492 fell as advancing issues outnumbered decliners by a 1.85-to-1 ratio.
The S&P 500 posted 24 new 52-week highs and 9 new lows while the Nasdaq Composite recorded 62 new highs and 116 new lows.
Total volume of shares traded across U.S. exchanges was about 10.8 billion, compared with the 12.6 billion average over the last 20 trading days.