U.S. stock indexes posted solid gains on Wednesday after early losses, supported by stronger-than-expected economic data. The S&P 500 rose 0.37%, the Dow Jones gained 0.48%, and the tech-heavy Nasdaq 100 advanced 0.72%. Investors welcomed the latest employment and services figures, which reinforced confidence in the resilience of the U.S. economy.
The ADP report showed private payrolls increasing by 42,000, surpassing expectations. Meanwhile, the ISM Services Index rose to 52.4 — the fastest pace in eight months. These results signaled renewed business momentum, although price pressures reached a three-year high, suggesting that inflationary risks persist.
Markets Rebound After Early Weakness
Stocks initially traded lower, with the S&P 500 and Nasdaq 100 hitting 1.5-week lows amid continued weakness in AI-infrastructure names. Super Micro Computer fell over 11% after disappointing results, sparking broader sector selling. However, investors later rotated back into chipmakers, lifting major indexes into positive territory.
The 10-year Treasury yield climbed to 4.16% following strong data, tempering hopes for faster rate cuts by the Federal Reserve. Still, futures imply a 62% probability of a 25-basis-point cut at the December FOMC meeting.
Chipmakers Power the Rally
Semiconductor stocks were the day’s biggest winners. Seagate jumped 11%, Micron rose 9%, Marvell gained 7%, and Lam Research and Western Digital climbed more than 6%. The sector benefited from rising optimism about AI-driven demand for data-center infrastructure.
Intel, Qualcomm, and Applied Materials each advanced more than 3%, helping to sustain the rally.
Corporate Earnings in Focus
Earnings season remains in full swing, with over 80% of S&P 500 companies beating expectations so far. Unity Software surged 18% after posting stronger-than-expected revenue and guidance. Lumentum and Toast gained 23% and 10%, respectively, while Amgen rose 7% on robust biotech sales.
On the downside, Pinterest plunged 21% after a weak Q4 forecast, and Zimmer Biomet and Axon each fell more than 9%. Super Micro and Arista Networks also dropped sharply following disappointing results.
Global Markets and Macroeconomic Context
European and Asian markets closed mixed: the Euro Stoxx 50 rose 0.16%, Shanghai Composite gained 0.23%, while Japan’s Nikkei 225 dropped 2.5%. European bond yields moved higher alongside U.S. Treasuries — the German Bund hit 2.67%, and the U.K. Gilt reached 4.46%.
Meanwhile, the ongoing U.S. government shutdown — now in its sixth week — remains the longest in history. The stalemate is dampening economic activity and delaying key government reports, potentially increasing the likelihood of further Fed policy easing.
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