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The S&P 500 opened near an all-time high on Wednesday as data showed U.S. private payrolls increased solidly in June, while the major U.S. stock averages look to wrap up their fifth straight quarter of gains.

The Dow Jones Industrial Average fell 1.55 points at the open to 34,290.74. The S&P 500 opened lower by 1.15 points, or 0.03%, at 4,290.65, while the Nasdaq Composite dropped 18.48 points, or 0.13%, to 14,509.85 at the opening bell.

The TSX was virtually unchanged in early trading.

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Overall, markets aren’t showing much conviction in either direction and there’s little to suggest there won’t be dip buying again on any meaningful pullback.

Asian markets were mixed overnight, but major European indexes this morning are mostly in the red and sporting losses of close to 0.8% in some instances. Investors are reluctant to add to positions amid mixed signals about progress in battling the pandemic and the key U.S. jobs report on Friday.

In Canada the focus is on GDP data that was released this morning. For April, GDP growth contracted 0.3% for the month - which was less negative than Street expectations of a 0.8% contraction. Year over year, GDP expanded 20% from very weak levels of last April - the first month of full business closures amid the pandemic.

Statistics Canada also provided a flash estimate for May, estimating contraction of 0.3% for the month, matching the April reading.

There was little reaction in currency and bond markets to the data.

“Third-wave lockdowns weighed heavily on activity across the board in April with some of the restrictions actually more stringent than during the second wave,” a note from BMO said ahead of today’s data release.

In corporate news this morning, Cogeco Communications announced that its subsidiary, Atlantic Broadband, has agreed with WideOpenWest to purchase all of its broadband systems located in Ohio for US$1.125-billion. Shares in Cogeco are up about 4% in early trading.

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The S&P 500 and the Nasdaq closed at record levels on Tuesday but the TSX remains a little shy of record highs from earlier this month.

U.S. private payrolls increased by 692,000 jobs last month, an ADP National Employment Report showed on Wednesday. Data for May was revised lower to show 886,000 jobs added instead of the initially reported 978,000. Economists polled by Reuters had forecast private payrolls would increase by 600,000 jobs.

The Labor Department’s more comprehensive and closely watched employment data for June is due on Friday, and market participants fear a strong reading could force the U.S. Federal Reserve to pare back its ultra-loose monetary policy.

Prospects of a transitory spike in inflation has pushed the benchmark S&P 500 and the Nasdaq to a series of record highs in recent sessions, helped by a comeback in tech-heavy growth stocks.

The S&P growth index which houses mega-cap names Apple Inc, Amazon, Facebook Inc and Microsoft Corp, has jumped nearly 11.9% this quarter, outperforming its value peer and narrowing the gap for the year-to-date performance.

The S&P 500 has climbed about 14.3% in the first half of the year and is set for its second best first-half performance since 1998, with energy, financials, real estate and communication services stocks notching the best performance at the sectoral level.

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The S&P/TSX Composite Index is up 7.8% this quarter and, for the first half of the year, has outperformed the U.S. benchmark, rising 15.7%.

Commodities

Oil prices rose on Wednesday, heading for monthly and quarterly gains, after industry data suggested U.S. crude stockpiles were shrinking while an OPEC report foresaw an undersupplied market this year, but a possible glut next year. The Brent crude contract for August, due to expire on Wednesday, was up 83 cents, or 1.1% at $75.59 a barrel by 1224 GMT. The September contract was up 99 cents at $75.27 a barrel. U.S. crude was up $1.10, or 1.5% at $74.08 a barrel.

Both Brent and WTIs are just below highs last reached in 2018, and are set to record their seventh monthly gain in the past eight months.

A Reuters poll showed that Brent was seen averaging $67.48 a barrel this year and WTI $64.54, both up from May’s poll.

Crude stocks in the United States were down by 8.2 million barrels, American Petroleum Institute data showed, according to two sources who spoke on condition of anonymity. Government data is due later on Wednesday.

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Hopes for a broad recovery received a boost from Mohammad Barkindo, Secretary General of the Organization of the Petroleum Exporting Countries (OPEC), who said on Tuesday that demand is expected to rise by 6 million barrels per day (bpd) in 2021, with 5 million bpd of that coming in the second half of the year.

Goldman Sachs forecasts that demand will rise by a further 2.2 million bpd by the end of 2021, leaving a 5 million bpd supply shortfall.

However, an internal OPEC report seen by Reuters highlights that the oil market could return to a glut after the group is expected to unravel oil production cuts of under 6 million barrels per day by April 2022.

OPEC+ is expected to discuss a potential extension of its current oil supply deal beyond April 2022 when it meets on Thursday, two sources told Reuters.

Currencies and bonds

The Canadian dollar is slighter stronger against the greenback this morning and saw little reaction to the GDP data, which came in close to expectations and probably underplays economic growth to come as provinces lift pandemic restrictions.

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Other corporate news

Earnings include: AGF Management Ltd.; Constellation Brands Inc.; Exfo Inc.; General Mills Inc.; Micron Technology Inc.; Security Devices International Inc.; Shaw Communications Inc.

Economic news

Canada’s real GDP contracted 0.3% in April from March, the first decline in a year, with May GDP likely down 0.3%, Statistics Canada said on Wednesday. Analysts polled by Reuters had expected GDP to fall 0.8% in April.

Canada’s Industrial Product Price Index rose 2.7% month over month in May and was up 16.4% compared with May 2020. The Raw Materials Price Index increased 3.2% on a monthly basis in May and was up 40.1% year over year.

U.S. private payrolls increased solidly in June, but the pace of hiring slowed from the prior month as companies continued to scramble to find workers to meet surging demand as the economy’s reopening gains momentum. Private payrolls increased by 692,000 jobs last month, the ADP National Employment Report showed on Wednesday. Data for May was revised lower to show 886,000 jobs added instead of the initially reported 978,000. Economists polled by Reuters had forecast private payrolls would increase by 600,000 jobs.

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(9:45 a.m. ET) U.S. Chicago PMI for June.

(10 a.m. ET) U.S. pending home sales for May. Consensus is a decline of 1.0 per cent from April.

With files from Reuters

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