U.S. stocks closed higher Wednesday on hopes Greece will strike a bailout deal with its international creditors ahead of the country’s referendum this weekend. Meanwhile, economists are turning their attention to Thursday’s highly anticipated employment report for June, which is forecast to show another strong month of U.S. job creation.
The financial sector was the biggest gainer in the S&P 500, adding nearly 1 percent, while energy closed lower, down 1.7 percent.
The Dow (INDEXDJX:.DJI) jumped 138.40 points, or 0.79 percent, to close at 17,757.91. The Standard & Poor’s 500 index (INDEXSP:.INX) added 14.31 points, or 0.69 percent, to finish at 2,077.42. And the Nasdaq Composite (INDEXNASDAQ:.IXIC) gained 26.26 points, or 0.53 percent, to end at 5,013.12.
This is an important week for the financial markets, not only because of the market-moving nature of Greece’s economic crisis, but also because of the U.S. employment report, due out Thursday. A robust nonfarm payrolls report could provide further evidence the U.S. economy is on strong enough footing to absorb the impact of a Federal Reserve interest rate hike in September.
The employment report is expected to show that employers added 230,000 jobs in June, down from 280,000 in May, according to analysts polled by Thomson Reuters. The unemployment rate is expected to tick down to 5.4 percent from 5.5 percent.
Average hourly earnings are forecast to increase 0.2 percent, and hours worked are expected to hold steady at 34.5 per week. The U.S. Labor Department will released its monthly nonfarm payrolls report Friday at 8:30 a.m. EDT.
Speculation is rising that a possible Greek exit from the eurozone would delay the Federal Reserve’s interest rate liftoff beyond September and possibly into next year, but economists say it’s still premature to determine at this point.
“For now we maintain our call for a September liftoff, but the Fed will be closely monitoring possible contagion effects that would include wider corporate bond spreads, weaker equity prices and a stronger U.S. dollar,” Kathy Bostjancic, head of U.S. macro investor services at Oxford Economics, said in a research note Wednesday.
Athens defaulted on its debt payment to the International Monetary Fund a day earlier, risking the country’s place in the 19-member eurozone. Prime Minister Alexis Tsipras said Wednesday the country will go ahead with the referendum on Sunday, adding it is not a determinant of whether Greece remains in the eurozone, Reuters reported.
The Greek government announced this week a bailout referendum would be held on July 5 for Greek citizens to vote on whether to accept creditors’ proposals.