U.S. stock markets bounced back on Wednesday, with the S&P 500 climbing 1.1%, the Dow Jones Industrial Average adding 1.3% (645 points), and the Nasdaq composite rallying 1.5%. This rebound followed a three-day sell-off, driven by easing pressure from the bond market as the 10-year Treasury yield fell to 4.57% from 4.67% and a decrease in oil prices amidst hopes for a peace deal between the U.S. and Iran.
Technology and chip stocks were a significant catalyst for the market's recovery, particularly Nvidia, which rose 1.3% ahead of its earnings report. After trading hours, Nvidia announced record quarterly revenues of $81.62 billion, exceeded analyst expectations for profit and revenue, and provided a better-than-expected forecast for the current quarter. The company also announced an $80 billion share buyback program and dramatically increased its quarterly dividend to $0.25 from $0.01.
Other chipmakers also saw substantial gains, with the Philadelphia SE Semiconductor index rallying 4.5%. Micron Technology, Intel, and AMD rose 5%, 7%, and 8% respectively. This optimism in the AI sector was highlighted by Carol Schleif, chief market strategist at BMO Private Wealth, who noted that "Technology is driving the bus again today, and the AI theme," despite initial concerns about rising rates and potential inflation.
The broader market also reacted to the release of minutes from the Federal Reserve's last meeting, which indicated a willingness among officials to consider a rate hike if inflation persisted above 2%. However, bets for a Fed rate hike in December decreased to 36.8% probability from 42% on Tuesday. Among the S&P 500 sectors, consumer discretionary led gains, up 2.5%, followed by technology, also up 2.5%. Conversely, the energy sector dropped 2.6%, and consumer staples slipped almost 1%, with Target shares falling 3.9% due to concerns about the macroeconomic outlook.
