Wall Street gains ground amid steady flow of earnings reports, upbeat economic updates

Wall Street rallied Wednesday as investors embraced positive economic data and digested a steady stream of corporate earnings reports, marking a reversal from Tuesday’s market decline.

The S&P 500 rose 24.74 points, or 0.4%, to 6,796.29, while the Dow Jones Industrial Average gained 225.76 points, or 0.5%, to 47,311. The tech-heavy Nasdaq composite climbed 151.16 points, or 0.6%, to 23,499.80.

Technology stocks largely drove the market’s gains, with Google parent Alphabet jumping 2.4%, Broadcom rising 2%, and Meta Platforms advancing 1.4%. Their positive performance helped offset losses from other tech giants, including Nvidia and Microsoft.

“The market continues to demonstrate resilience despite ongoing economic uncertainties,” said a market analyst who requested anonymity. “We’re seeing investors respond positively to better-than-expected economic indicators, which suggests confidence in continued growth despite challenges.”

Corporate earnings remained in focus as companies across various sectors reported quarterly results. Fast-food giant McDonald’s saw its shares rise 2.2% after reporting that the return of its popular Snack Wraps boosted third-quarter sales. International Flavors & Fragrances jumped 4.1% after exceeding Wall Street’s profit expectations.

Not all earnings reports sparked optimism, however. Axon Enterprise, maker of Taser devices, slumped 9.4% after forecasting profits below analyst expectations. Concert promoter Live Nation Entertainment fell 10.6% following disappointing quarterly results.

The earnings season has taken on increased significance amid the ongoing government shutdown, which has halted the release of key economic data including monthly inflation and employment reports. These statistics typically provide investors, economists, and the Federal Reserve with critical insights into economic health.

Despite the data vacuum, private sector economic reports have offered some clarity. ADP’s monthly report showed private payrolls increased more than expected in October, providing a partial glimpse into the job market, which has been gradually weakening in recent months.

Additionally, the Institute for Supply Management reported that the services sector, which represents the largest component of the U.S. economy, expanded more than anticipated in October. While overall business activity grew, employment within the sector continued to contract.

“The survey provides a reassuring sign that economic growth persisted in October despite the government shutdown,” noted Bill Adams, chief economist for Comerica Bank, in an investor communication.

The labor market’s ongoing weakness remains a significant concern for the Federal Reserve, which recently cut its benchmark interest rate for the second time this year. Lower rates can stimulate economic activity by reducing borrowing costs, but they also risk fueling inflation, which remains above the Fed’s 2% target. Consumer prices rose 3% in September.

Fed Chair Jerome Powell and several colleagues have expressed caution about further rate cuts while inflation remains elevated. This balancing act between addressing employment concerns and controlling inflation presents a challenging dilemma for monetary policymakers.

“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. “We are nearing stall speed in the labor market, and that will get the Fed’s attention.”

Market expectations for another December rate cut have moderated, with investors now forecasting a 63% probability, down from 90% before the previous reduction, according to CME FedWatch data.

Trade tensions also continue to loom over the economic landscape. The unpredictability of potential tariffs under a second Trump administration has created uncertainty for businesses and consumers. On Wednesday, the U.S. Supreme Court heard arguments regarding the legality of sweeping tariffs, adding another layer of complexity to trade policy expectations.

In bond markets, Treasury yields climbed, with the 10-year Treasury yield rising to 4.16% from 4.09%, while the two-year Treasury yield increased to 3.63% from 3.58%.

European markets gained ground on Wednesday, while Asian markets closed mostly lower.