US stocks end higher as data keep Fed rate cut expectations elevated

US stocks advanced to close higher on Wednesday, as a flurry of economic data kept expectations elevated for an interest rate cut by the US Federal Reserve next week, while a fall in Microsoft's shares curbed the advance.

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The record-long 43-day US government shutdown kept investors in the dark about official data and hampered the ability to gauge the Fed’s likely path on interest rates. But the backlog is now being cleared along with data from nongovernmental sources.

The Institute for Supply Management said US services activity was little changed in November at 52.6 versus 52.4 in October while the prices paid component dipped but remained elevated. The reading comes ahead of the delayed personal consumption expenditures report, the Fed’s preferred inflation gauge, on Friday.

Separately, the ADP National Employment Report showed US private payrolls unexpectedly declined in November. With official employment reports for October and November due only after the central bank’s policy announcement, market participants have placed more weight than usual on private-sector data.