U.S. Stocks Recover From Early Pullback To Close Mostly Higher

Stocks came under pressure early in the session on Wednesday but showed a significant rebound over the course of the trading day. The major averages climbed well off their worst levels of the day and into positive territory.

The major averages reached new highs for the session going into the close of trading. The Dow advanced 317.24 points or 0.7 percent to 44,873.28, the S&P 500 climbed 23.60 points or 0.4 percent to 6,061.48 and the Nasdaq rose 38.31 points or 0.2 percent to 19,692.33.

The rebound on Wall Street came amid a notable move to the downside by treasury yields, with the yield on the benchmark ten-year note slumping to its lowest closing level in well over a month.

Treasury yields tumbled after the Treasury Department said its current auction sizes leave it well positioned to address potential changes to the fiscal outlook.

Based on current projected borrowing needs, the Treasury said it anticipates maintaining long-term securities auction sizes for at least the next several quarters.

The initial pullback on Wall Street came amid weakness among tech stocks due to a negative reaction to earnings news from Alphabet (GOOGL) and Advanced Micro Devices (AMD).

Shares of Alphabet plunged by 7.3 percent after the Google parent reported better than expected fourth quarter earnings but its cloud revenues missed estimates.

Chip maker AMD also tumbled by 6.3 percent after reporting fourth quarter earnings and revenues that beat estimates but its data center sales fell short of expectations.

On the U.S. economic front, the Institute for Supply Management released a report showing service sector growth in the U.S. unexpectedly slowed modestly in the month of January.

The ISM said its services PMI dipped to 52.8 in January from a revised 54.0 in December. While a reading above 50 still indicates growth, economists had expected the index to inch up to 54.3 from the 54.1 originally reported for the previous month.

Meanwhile, payroll processor ADP released a separate report showing private sector employment in the U.S. increased by more than expected in the month of January.

ADP said private sector employment climbed by 183,000 jobs in January after rising by an upwardly revised 176,000 jobs in December.

Economists had expected private sector employment to rise by 150,000 jobs compared to the addition of 122,000 jobs originally reported for the previous month.

Sector News

Gold stocks moved sharply higher on the day, driving the NYSE Arca Gold Bugs Index up by 2.7 percent to a three-month closing high.

The rally by gold stocks came as the price of the precious metal continues to climb to record highs amid concerns about the escalating U.S.-China trade war.

Computer hardware stocks also saw considerable strength on the day, resulting in a 2.5 percent jump by the NYSE Arca Computer Hardware Index.

Semiconductor, telecom and biotechnology stocks also showed strong moves to the upside, while airline saw significant weakness.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region ended mixed on Wednesday. Japan’s Nikkei 225 Inched up by 0.1 percent and South Korea’s Kospi jumped by 1.1 percent, while China’s Shanghai Composite Index fell by 0.7 percent and Hong Kong’s Hang Seng Index slid by 0.9 percent.

The major European markets also turned in a mixed performance on the day. While the French CAC 40 Index dipped by 0.2 percent, the German DAX Index rose by 0.4 percent and the U.K.’s FTSE 100 Index climbed by 0.6 percent.

In the bond market, treasuries showed a strong move to the upside, extending the advance seen over the course of the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slumped 9.1 basis points to 4.422 percent.

Looking Ahead

A report on weekly jobless claims may attract attention on Thursday along with preliminary readings on labor productivity and costs in the fourth quarter of 2024.