U.S. stocks experienced a significant rally on Wednesday, marking a fourth consecutive day of gains on Wall Street. The S&P 500 climbed by 0.7%, while the Dow Jones Industrial Average and the Nasdaq composite both saw increases of 0.7% and 0.8%, respectively. This upward momentum was largely fueled by strong performances from technology companies and widespread gains across various sectors in the S&P 500 index, where advancers outnumbered decliners by more than two to one on the New York Stock Exchange.
The current week is shortened for U.S. markets due to the Thanksgiving holiday, which will close trading on Thursday and limit hours on Friday. The recent recovery comes as investor optimism grows around the potential for another interest rate cut by the Federal Reserve in December, which has helped reverse much of the losses suffered earlier this month.
“It’s a tech-driven, buy-the-bounce kind of response to the very swift sell-off that we saw,” stated Sam Stovall, chief investment strategist at CFRA. He noted that there is a prevailing belief among investors that the recent market pullback has concluded, setting the stage for a strong finish to the year.
Dell Technologies surged 5.8% following its announcement of record orders for artificial intelligence servers. This followed a previous slump when tech stocks, including Nvidia—valued as the most significant market player with a 1.4% gain—were believed to be overvalued amid the excitement surrounding AI advancements. Other notable tech stocks included Microsoft, up 1.8%, and Broadcom, which increased by 3.3%.
The financial sector also contributed positively, with Robinhood Markets leading the charge with a notable 10.9% rise after revealing plans to launch a futures and derivatives exchange next year. Urban Outfitters experienced a substantial jump of 13.5% after outperforming Wall Street earnings expectations this week, while Petco climbed even higher, up 14.5%, after adjusting its fiscal year earnings outlook despite mixed quarterly results.
Conversely, shares of Deere fell by 5.7% after the company released a cautious forecast, citing pressures from tariffs.
In the bond market, the yield on the 10-year Treasury decreased to 3.99%, while that of the 2-year Treasury rose to 3.48%. The market optimism is bolstered by statements from Federal Reserve officials, giving traders increased confidence that another rate cut may happen in December.
Traders are currently pricing in an approximately 83% probability of this occurrence, as the central bank grapples with the dual challenges of rising inflation and a slowing job market. While the recent corporate earnings reports have mostly delivered positive news, economic indicators have shown mixed signals, including a decline in retail purchases in September that fell below economist projections.
The S&P 500 rose 46.73 points, closing at 6,812.61, while the Dow gained 314.67 points to finish at 47,427.12, and the Nasdaq added 189.10 points to wrap up the day at 23,214.69. International markets mirrored this positive trend, with European shares climbing, Germany’s DAX up by 1.1%, and the CAC 40 in Paris increasing by 0.9%. In Asia, Tokyo’s Nikkei 225 surged by 1.9%, reflecting a robust rally among major exporters and technology stocks.