Horneman on CNBC: Dow Closes More Than 100 Points Higher Tuesday, S&P 500 Ekes Out A Gain In Muted Session

The Dow Jones Industrial Average rose on Tuesday as Wall Street sought its footing after an uneven start to the month.

The 30-stock Dow climbed 140.26 points, or 0.36%, to close at 38,711.29. The S&P 500 added 0.15% to finish the session at 5,291.34, and the Nasdaq Composite advanced 0.17% to 16,857.05. Treasury yields were notably lower, with the rate on the benchmark 10-year note slipping about 7 basis points.

Dow Inc, 3M and Caterpillar fell more than 1%, keeping gains for the blue-chip index in check. Bath & Body Works was the worst-performing stock in the S&P 500, losing nearly 13% on the back of disappointing guidance.

Wall Street is focusing on the crucial nonfarm payrolls report for May on Friday. Investors want a labor market that is weak enough to allow the central bank to cut interest rates, but not so weak that it spurs worries over a potential recession.

“Right now, the market is looking for a catalyst,” said Megan Horneman, chief investment officer at Verdence Capital Advisors, which manages more than $3 billion in assets. “There’s going to come a point where the bad news is actually bad news.”

Investors also parsed the latest reading on the state of the jobs market. Employment data from the Labor Department showed 8.059 million vacancies in April, the lowest level in more than three years. An estimate from Dow Jones called for 8.4 million openings. Traders are now pricing in a nearly 62% likelihood of two rate cuts this year, up from roughly 36% a week ago, according to the CME FedWatch Tool.

But Horneman cast doubt over the likelihood of an interest rate cut this year from the Fed due to inflation, and particularly price pressures in the services sector, remaining sticky. She noted that the broader market will likely “stay pretty sideways” until more insight is drawn from the jobs report.

Tuesday’s market move comes one day after the Dow fell more than 115 points, or 0.3%, on the first trading day of June. The S&P 500 and Nasdaq Composite both rose modestly on Monday as weak manufacturing data weighed on market sentiment