4:15pm: Stock market rises on semiconductor strength
US stocks made gains on Wednesday, with the Dow Jones closing 0.8% higher, reclaiming the 43,000 mark. The S&P 500 and Nasdaq Composite added 0.5% and 0.3%, respectively.
After hitting record highs earlier in the week, the indexes faced a selloff on Tuesday, driven by declines in chip and energy stocks amid ongoing earnings reports.
Chip stocks rebounded, with Nvidia climbing over 3% following Tuesday’s drop, and other semiconductors like Broadcom, Arm, Micron, and Marvell also rising. However, major tech stocks such as Apple, Microsoft, Meta, Alphabet, and Amazon saw declines.
While Wednesday's economic calendar was light, investors remain focused on upcoming data and Federal Reserve signals on the economy and potential rate cuts. The yield on 10-year Treasurys eased to 4.02%, and gold edged up to $2,690 an ounce. Bitcoin surged to near $68,000, its highest level since late July.
3:30pm: Economic data better than expected
Economic data has been better than expected lately, according to Lawrence Gillum, Chief Fixed Income Strategist for LPL Financial.
"To say the U.S. economy has been difficult to read is an understatement," Gillum wrote.
Amid high inflation, rising interest rates, and labor market concerns, 59% of Americans believe the U.S. is in a recession, according to a June survey by Affirm. However, economists have lowered the likelihood of a recession over the next 12 months to around 15%, aligning with the typical annual recession probability.
"But," Gillum added, "after what looks like a temporary growth scare over the summer months, economic growth data has been coming in generally better than expected lately, which has helped push Treasury yields higher."
3:10pm: September retail sales report ahead
Stocks rose by Wednesday afternoon, with the Dow Jones gaining over 300 points (0.8%), the Nasdaq rising 0.4%, and the S&P 500 up 0.6%.
Investors are also anticipating the September retail sales report, expected to show a 0.3% increase, following a 0.1% rise in August. The report could provide further insight into whether the US economy is cooling or reaccelerating, a topic of debate following a strong September jobs report.
12:45pm: Nasdaq heads into the green
By early afternoon the Nasdaq had flipped to the green, adding 4 points to reach 18,319.
The tech-heavy index joined the Dow and S&P 500 in positive territory. The Dow was up nearly 241 points at 42,981 and the S&P 500 had added 13 points at 5,828.
11:50am: Russell surges
The Russell 2000 index, one of the leading small cap stock indices, was up nearly 1.6% on Wednesday morning.
Small-cap stocks have been trading within a consolidation range in recent months, as investors have weighed the likelihood of a soft landing and the future direction of monetary policy, noted LPL Financial's Adam Turnquist.
"With the growth outlook recently improving — underpinned by better-than-feared labor market conditions — and increased visibility into Fed rate cuts, the RTY has rallied off the lower end of its rising price channel," Turnquist wrote.
"Recent strength in the banking space — the RTY’s largest sector by weighting — has further supported small caps."
Although absolute performance has improved, the RTY vs. S&P 500 ratio chart remains in a downtrend, Turnquist noted, still below its declining 200-day moving average.
"A close above the July highs would validate a trend reversal in favor of small caps outperforming," he added.
10:55am: Gold hits new record high
Gold prices have risen to a new record high, topping $2,680, which analysts attributed to movements in government bond markets.
In short, inflation expectations on both sides of the Atlantic have eased this week, leading to rising expectations for interest rate cuts and therefore putting pressure on bond yields, which makes gold more attractive to some investors.
US Treasuries have rallied this week, having sold off following the US Federal Reserve rate cut decision last month, which drove the 10-year to a yield of 4.12%, the highest since late July.
A rally yesterday dragged the yield back to circa 4.01% and today the US 10-year yield has fallen to just over 4.0%.
9.50am: Tech giants drag Nasdaq lower
US stocks have opened indecisively, with the main Wall Street indices slow to choose a direction in the first minutes of trading, on another day void of any major US economic data.
The Dow Jones has gained 28 points or less than 0.1%, while there is a small fall for the S&P 500 of 0.06%.
Tech stocks seem to be continuing to slip lower, with the Nasdaq Composite down 0.2%, led by falls of around 1% for both Apple Inc (NASDAQ:AAPL, ETR:APC), Microsoft Corp (NASDAQ:MSFT) and Meta Platforms Inc (NASDAQ:META, ETR:FB2A, SWX:FB), while Nvidia is up 0.4% so far.
Tech fallers are led by ASML NV and Intel Corp (NASDAQ:INTC, ETR:INL), down 1.9% and 1.5%, w
Morgan Stanley (NYSE:MS), after its earnings beat expectations, is up over 5%.
8.15am: Stock market resilience tested
In recent weeks, the resilience of the stock markets has been "remarkable", says Fawad Razaqzada, market analyst at City Index.
"Despite many factors that should have caused a sell-off—like hotter US inflation data, climbing bond yields, geopolitical tension, concerns about a recession, and a slowing Chinese economy —the S&P hit new record highs.
"While the Nasdaq 100 has so far failed to follow suit, it has nonetheless closed in on its own record high that was set in July, before staging a pullback on Tuesday."
He notes that bond yields are still elevated despite coming down in the last couple of days, with the 10-year yield still above 4%.
"But for how much longer will the bulls be able defy these sorts of macro forces and justify buying stocks, without first seeing a decent pullback?"
He said the Nasdaq has enjoyed a strong run, but said "the market is defying expectations", meaning "a sharp reversal could still be in the cards as we approach the US presidential election".
7.20am: Mixed start for Wall Street predicted, Nasdaq up slightly
US futures are set for modest gains on Wednesday, rebounding from falls led by microchip companies the day before.
Nasdaq 100 futures were leading the way ahead of the opening bell, up 0.1%, with S&P 500 and Dow Jones futures both up less than 0.1%.
Yesterday, tech stocks on the Nasdaq led the retreat, falling 1%, while the S&P 500 and Nasdaq both fell almost 0.8%.
Chip stocks drove the decline, following reports that the US government may cap the sale of advanced artificial intelligence chips from American companies to certain countries, as well as an unexpected warning from semiconductor equipment giant ASML of a slower than expected recovery.
Today, NVIDIA Inc is trading 0.5% higher premarket, bouncing back from its 4.5% decline.
Morgan Stanley (NYSE:MS) is up 3% premarket after beating third-quarter estimates on better-than-expected wealth management, trading and banking numbers. Earnigns per share of $1.88 were well ahead of the $1.58 consensus estimate.