U.S. stocks recovered part of their recent losses Wednesday, with the Dow, S&P 500 and Nasdaq all closing higher as investors returned to beaten-down sectors despite continued pressure from rising bond yields, Middle East tensions and signs of softer hiring.
By yourNEWS Media Newsroom
Wall Street snapped back Wednesday after three consecutive losing sessions, as investors moved into stocks that had been hit hard during the recent pullback and helped all three major U.S. indexes finish in positive territory.
The Dow Jones Industrial Average led the major benchmarks on a percentage basis, while small-cap stocks outperformed their larger peers as measured by the Russell 2000.
According to preliminary closing data, the Dow climbed 299.37 points, or 0.56%, to 53,066.25.
The S&P 500 advanced 35.35 points, or 0.46%, to 7,666.82, while the Nasdaq Composite gained 120.07 points, or 0.46%, to finish at 26,219.85.
Investors found some of the strongest opportunities in industries that had recently been under pressure.
Airlines, regional banks and gold and silver miners were among Wednesday’s leading groups.
Technology performance was more divided.
Software and services companies continued to struggle amid concerns that artificial intelligence could disrupt parts of their businesses, while semiconductor stocks regained ground.
The Philadelphia SE Semiconductor Index moved higher after suffering a steep retreat from its summer highs. The index, which had been a major contributor to the market’s gains earlier this year, has lost nearly one-quarter of its value since late June.
Broadcom was scheduled to report second-quarter financial results after Wednesday’s closing bell, keeping attention focused on the chip sector.
Nvidia, which has become one of the most prominent beneficiaries of the artificial intelligence investment boom, finished higher.
Micron and Qualcomm were among other chipmakers that also advanced.
Lauren Cassidy, chief investment officer at Founders 100 ETF in Dallas, said investors continue to balance geopolitical uncertainty and inflation risks against strong corporate fundamentals and expanding adoption of artificial intelligence.
“The war is continuing longer than anyone hoped, and when it ends, energy will cool and inflation won’t be as much of an issue,” Cassidy said. “At the same time, we just had a record earnings season, with wonderful fundamentals being driven by the accelerating adoption of AI.”
Cassidy said the technology’s development remains at an early stage despite the enormous amount of investment and market attention it has already attracted.
“AI adoption is still in the very early innings and it’s just now accelerating,” Cassidy added. “We could see exponential growth from here.”
Several individual companies also produced significant moves Wednesday following corporate announcements.
Dell rallied after the computer hardware company raised its full-year revenue and profit forecasts.
Brown-Forman, the maker of Jack Daniel’s whiskey, gained after reporting quarterly profit that exceeded expectations.
Uber Technologies also moved higher after the rideshare company announced plans to eliminate approximately 10% of its workforce.
Wednesday’s stock gains were tempered, however, by another turbulent session in global bond markets.
A worldwide selloff in government debt continued as investors confronted persistent inflation concerns, rapidly expanding government debt burdens and escalating conflict in the Middle East.
Rising energy prices have added another layer of uncertainty.
The United States and Iran intensified their military attacks in what became the largest exchange of airstrikes since July, weakening expectations that the two governments could soon return to negotiations.
A prolonged conflict could keep oil and other energy costs elevated, potentially feeding inflation throughout the global economy.
That possibility has raised concerns that central banks could ultimately face greater pressure to increase borrowing costs rather than ease monetary policy.
Investors were also digesting a mixed set of U.S. economic indicators.
Payroll processor ADP reported that private employers added fewer jobs than economists had expected during August, adding to evidence that hiring has become more subdued.
Separately, previously reported data on new orders for core capital goods were revised downward.
The revision pointed to a possible slowdown in planned business investment, providing another signal that companies may be becoming more cautious about capital spending.
The combination leaves investors confronting competing economic forces.
Slower hiring and softer corporate spending could argue for easier monetary policy, while higher energy costs and persistent inflation could push policymakers in the opposite direction.
Markets will receive additional information Thursday.
Scheduled economic releases include international trade figures, second-quarter labor costs and productivity data, as well as the latest services purchasing managers index.
For Wednesday, however, buyers returned after three sessions of losses, allowing stocks to regain some ground despite the continued bond-market turmoil and uncertainty surrounding the U.S.-Iran conflict.
The strongest gains came from a broad collection of sectors rather than a single dominant group, with airlines, miners, banks and semiconductor companies all participating in the rebound as investors searched for opportunities among stocks that had been marked down during the recent risk-off retreat.
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