U.S. stocks rose on Wednesday as Wall Street tried to recover from this week’s losses amid a flood of upbeat economic data and earnings releases.
The S&P 500 jumped 1.6% and the Dow Jones Industrial Average gained 450 points, or roughly 1.4%. The technology Nasdaq Composite jumped 2.6%.
Bonds also pushed ahead after Tuesday’s hawkish Fedspeak, with the benchmark 10-year Treasury yield near 2.8% and the 2-year yield above 3.1%.
Economic data released on Wednesday that showed the U.S. services sector improved in July helped boost sentiment. The ISM services PMI rose to 56.7 percent last month from June’s reading of 55.3 as supply chain woes appeared to ease.
Robin Hood (HOOD) shares jumped more than 13%, one day after the brokerage said it would laid off nearly a quarter of its staff and posted its sixth straight quarterly loss.
Shares of CVS (CVS) gained 5% after the drugstore chain reported earnings that beat estimates and raised its full-year guidance.
Starbucks (SBUX) shares rose 3% after the cafe reported fiscal third-quarter earnings late Tuesday that It largely beat Wall Street forecasts, however inflationary pressures, labor costs, unionization efforts and the search for a permanent CEO clouded the quarter.
Meanwhile, shares of AMD (AMD) fell nearly 4% after the chip maker warned of a worse than expected third quarter late on Tuesday.
As economic data shows signs of slowing and companies continue to downgrade their outlooks, analysts are making larger-than-average cuts to earnings per share estimates for S&P 500 companies for the third quarter. Wall Street lowered its bottom-line EPS consensus estimate by 2.5% from June 30 to July 28, according to FactSet data. Over the past five years – or 20 quarters – the average decline in the bottom-up EPS estimate in the first month of a quarter has been 1.3%.
In commodity markets, OPEC and its allies gave the go-ahead to a small increase of about 100,000 barrels a day in oil production after calls from the US and other big users for more supplies. The move, while symbolic, is expected to have little impact on prices. Crude oil retreated from the daily high in the afternoon, with WTI (CL=F) just above $92 a barrel and Brent (BZ=F) at around $98.20.
Wednesday’s moves follow a day of declines on Wall Street, which sent stocks closed lower for a second straight session amid a high-stakes visit from House Speaker Nancy Pelosi to Taiwan, raising concerns about US-China relations.
On Tuesday, investors absorbed hawkish Fedspeak that suggested more interest rate hikes were on the way in the central bank’s efforts to curb inflation. San Francisco Federal Reserve President Mary Daley on Tuesday said policymakers are “resolute and completely united” in their goal of restoring price stability, and Chicago Federal Reserve President Charles Evans told reporters that officials were “at least a few reports away” from seeing enough improvement in inflation data to slow the rate of hikes of interest.
Meanwhile, St. Louis Federal Reserve President James Bullard said the US Federal Reserve and the European Central Bank could still achieve a “relatively soft landing” as they tighten monetary conditions.
“I think the story for the markets is still, ‘What’s going on with the Federal Reserve?’ What’s going on with the tightening?'” Manulife Investment Management global macro strategist Eric Theoret told Yahoo Finance Live on Tuesday. “When it comes to geopolitics, it’s not really driving the market right now.”
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
Click here for the latest stock market news and in-depth analysis, including stock-changing events
Read the latest financial and business news from Yahoo Finance
Download the Yahoo Finance app for An apple or Android
Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedInand YouTube