The stock market rallied on Wednesday, reversing losses from earlier this week thanks to stronger-than-expected economic data which helped offset lingering recession fears, even as Federal Reserve officials continue to promise more rate hikes to bring down inflation.
Stocks rebounded after back-to-back losing sessions earlier this week: The Dow Jones Industrial Average was up 1.3%, over 400 points, while the S&P 500 rose 1.6% and the tech-heavy Nasdaq Composite 2.6%.
Markets got a boost after a surprise rebound in the U.S. services sector in July, with the ISM non-manufacturing purchasing managers index rising to a reading of 56.7—above 55.3 last month and 54 expected by economists.
Investors also cheered comments from St. Louis Federal Reserve President James Bullard, who told CNBC on Wednesday that the U.S. economy is “not in a recession right now” and the Fed will keep hiking rates to bring down inflation.
Shares of vaccine maker Moderna surged 16% after reporting strong quarterly profits and announcing $3 billion in share buybacks, while shares of coffee chain Starbucks jumped nearly 5% after similarly beating expectations.
Shares of popular stock trading app Robinhood, meanwhile, jumped 13%—despite the company slashing 23% of its workforce—thanks to optimism from Wall Street analysts who cheered the cost-saving measures.
Tech stocks led the market higher on Wednesday, with the likes of Big Tech giants Apple, Amazon and Alphabet all rising by 2% or more, while consumer stocks also broadly rallied.
It is “extremely impressive” that stocks are rising despite Treasury yields continuing to surge for a second day in a row, notes Vital Knowledge founder Adam Crisafulli. More hawkish commentary from Fed officials, combined with the strong services data, is driving “broad” gains across S&P 500 sectors, all of which finished higher with the exception of energy.
Shares of Hong Kong-based fintech firm AMTD Digital plunged 50% on Wednesday, a day after surging 126%. The under-the-radar company has little revenue but an astronomical valuation of more than $200 billion, prompting some experts to call it the new “perfect meme stock.”
Investors shook off recent concerns about rising U.S.-China tensions, which weighed on markets in the previous session. House Speaker Nancy Pelosi (D-Calif.) visited the democratically governed island of Taiwan on Tuesday, a move condemned by China, which claims the territory as part of its country.