NEW YORK (AP) — Stocks rose on Wall Street Wednesday as more U.S. companies turn in their latest quarterly reports and several economic updates shed some light on the U.S. economy.
The S&P 500 rose 0.8%. The Dow Jones Industrial Average rose 300 points, or 0.7%, as of 1:35 p.m. Eastern time. The Nasdaq composite rose 1.1%.
The gains were broad and marked a reversal from the prior day's dip. Neary every sector within the S&P 500 gained ground and the index recovered a majority of its losses from Tuesday.
Big technology stocks once again led the broader market. Nvidia rose 1.6% and Google's parent, Alphabet, jumped 2.4%. Their huge values give them outsized influence over the market. Retailers and financial firms also helped lift the market.
Company earnings and forecasts were once again a big focus for Wall Street, with results coming from a broad spectrum of industries.
McDonald’s rose 1.8% after reporting that its sales benefited from the return of its popular Snack Wraps in the third quarter. International Flavors & Fragrances jumped 6.4% after beating Wall Street's latest quarterly profit forecasts.
On the losing side, Taser maker Axon Enterprise slumped 8.2% after forecasting weaker profits than analysts were expecting. Live Nation Entertainment fell 7.6% after its latest results fell short of analysts' forecasts.
The latest round of earnings offers Wall Street a source of information on consumers, businesses and the economy that is otherwise lacking amid the government shutdown. Important monthly updates on inflation and employment have ceased, leaving investors, economists and the Federal Reserve without a fuller picture of the economy.
There are still several informative private economic updates that Wall Street can review.
A monthly report from ADP showed that private payrolls rose more than expected in October. The report offers a partial glimpse into the job market, which has been generally weakening and raising broader concerns about economic growth.
The services sector, which is the largest part of the U.S. economy, expanded in October more than Wall Street expected, according to the Institute for Supply Management. The report shows that while overall business activity grew, employment was still contracting.
“The survey provides a reassuring sign that economic growth persisted in October despite the government shutdown,” Bill Adams, chief economist for Comerica Bank, wrote in a note to investors.
A weaker job market remains a big concern for the Fed. The central bank cut its benchmark rate for the second time this year at its most recent meeting, in part to help bolster the economy amid a weakening job market. Lower interest rates can make a wide range of loans and credit less expensive, potentially promoting economic growth. But, lower rates can also add fuel to inflation, which could stunt economic growth.
Fed Chair Jerome Powell and several other Fed officials have expressed concerns about more rate cuts, as inflation remains stubbornly above the central bank's target of 2%. Consumer prices rose 3% in September.
The mix of a weaker job market and hot inflation leaves the Fed in a tough position.
“For Fed watchers, this ADP report should make it clear that a December rate cut is now in play,” said Jamie Cox, managing partner for Harris Financial Group, in a note to investors. “We are nearing stall speed in the labor market, and that will get the Fed’s attention.”
Wall Street has tempered its expectations for another interest rate cut in December. Investors are now forecasting a 65% chance that the Fed will cut interest rates, according to CME FedWatch. That's down from a 90% chance just prior to the previous rate cut.
The threat of tariffs also continues to hang over consumers and businesses. President Donald Trump's trade war with China, Canada and many other nations has been unpredictable. The full impact of higher prices is difficult to forecast because of constant shifts in policy. The U.S. Supreme Court is hearing arguments Wednesday about the legality of the sweeping tariffs.
Treasury yields rose in the bond market. The yield on the 10-year Treasury rose to 4.15% from 4.09% late Tuesday. The yield on the two-year Treasury rose to 3.62% from 3.58% late Tuesday.
European markets gained ground and Asian markets closed mostly lower.
