Stock market news live updates: Stocks soar after back-to-back losing days
U.S. stocks rallied Wednesday, led by gains in the technology sector, as strong earnings and economic data lifted sentiment on Wall Street after two straight sessions of losses.
The S&P 500 jumped 1.6%, and the Dow Jones Industrial Average gained 415 points, or roughly 1.3%. The tech-heavy Nasdaq Composite surged 2.6%.
Bonds also pushed forward after hawkish Fedspeak Tuesday, with the benchmark 10-year Treasury yield holding well above 2.7% and the 2-year yield near 3.1%.
Economic data out Wednesday that showed the U.S. services sector picked up in July helped at least temporarily relieve some concerns that a recession was unavoidable. The ISM Services PMI hit 56.7 percent last month in a surprise jump from June's reading of 55.3 as supply chain issues appeared to ease.
St. Louis Federal Reserve President James Bullard also said he did not think the U.S. economy was in a recession in a televised interview with CNBC.
Robinhood (HOOD) shares closed up nearly 12%, one day after the brokerage said it would lay off nearly a quarter of its staff and reported its sixth straight quarterly loss.
Shares of CVS (CVS) gained 6.2% after the drugstore chain reported earnings that beat estimates and lifted its full-year guidance.
Starbucks (SBUX) shares rose 4.3% after the coffee house unveiled fiscal third quarter earnings late Tuesday that largely beat Wall Street estimates despite inflationary pressures, labor costs, unionization efforts and the search for a permanent CEO clouding the quarter.
Meanwhile, shares of AMD (AMD) slipped 1.2% following a warning by the chipmaker of a worse-than-expected third quarter late Tuesday.
As economic data shows signs of slowing and companies continue to dim their outlooks, analysts are making larger cuts than average to earnings per share estimates for S&P 500 companies for the third quarter. According to data from FactSet, Wall Street lowered its consensus bottom-up EPS estimate by 2.5% from June 30 to July 28. During the past five years – or 20 quarters – the average decline in the bottom-up EPS estimate during the first month of a quarter has been 1.3%.
In commodities markets, OPEC and its allies green lighted a small increase of about 100,000 barrels per day in oil production following calls by the U.S. and other major consumers for more supply. The move, while symbolic, is expected to have little impact on prices. Crude oil retreated from a daily high in the afternoon, with WTI (CL=F) just above $92 per barrel and Brent (BZ=F) at roughly $98.20.
Wednesday's moves follow a down day on Wall Street that saw stocks close lower for a second consecutive session amid a high-stakes visit by House Speaker Nancy Pelosi to Taiwan that raised worries around U.S.-China relations.
On Tuesday, investors digested hawkish Fedspeak that suggested more interest rate hikes were underway the central bank’s efforts to curb inflation. San Francisco Fed President Mary Daly on Tuesday said policymakers were “resolute and completely united” in their objective of restoring price stability, and Chicago Fed President Charles Evans told reporters that officials were “at least a couple of reports away” from seeing enough improvement in inflation data to scale back on the pace of hiking rates.
Meanwhile, St. Louis Federal Reserve President James Bulllard said the U.S. Federal Reserve and the European Central Bank can still achieve a "relatively soft landing" as they tighten monetary conditions.
"I think the story for markets is still, ‘What's happening with the Fed? What's happening with tightening?’" Manulife Investment Management Global Macro Strategist Eric Theoret told Yahoo Finance Live on Tuesday. "When it comes to geopolitics, it's not really driving market movement at the moment."
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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