NEW YORK: Wall Street’s major indexes surged on Wednesday, with gains in big technology companies lifting the Nasdaq to near three-month highs as key readings on the services sector and new orders helped calm recession fears.
A fresh batch of strong results from PayPal and CVS Health Corp also boosted sentiment in a largely upbeat second quarter that has helped markets bounce back from the fallout of the Ukraine war, rising inflation and a rise in borrowing costs.
Apple Inc rose 3.5% and Microsoft Corp added 2.7%, helping the broader growth stocks index outperform its value counterpart.
“An economy that is not falling into recession but is not roaring higher at this time would have you shift away from value stocks into growth,” Kim Forrest, chief investment officer at Bokeh Capital Management said.
PayPal Holdings jumped 9.5% as the fintech firm raised its annual profit guidance and said activist investor Elliott Management has an over $2 billion stake.
CVS Health Corp gained 5.4% as the largest US pharmacy chain raised its annual profit forecast after posting strong quarterly results.
The benchmark S&P 500 index and tech-heavy Nasdaq are up 13.3% and 18.2%, respectively, from the lows hit in mid-June, but are still in a bear market.
Wall Street started August on a sour note as factory activity in the United States, China and Eurozone weakened in July. But worries eased on Wednesday as the US services sector, which accounts for more than two-third of the economic activity, rebounded unexpectedly.
It rose in July to 56.7 from 55.3 in June amid strong order growth, while supply bottlenecks and price pressures eased. A separate survey showed new orders for US-manufactured goods increased solidly in June.
“(Today’s) data further support our view that service-sector activity will hold up well in the near-term,” Wells Fargo economists wrote in a note.
“The recent easing in prices may in part be due to lower in commodity prices, but nonetheless this broad easing of price pressure will be welcome news for policymakers tasked with quelling inflation.” Meanwhile, Richmond Federal Reserve President Thomas Barkin on Wednesday joined policymakers voicing determination that the US central bank is committed to getting inflation under control and returning it to 2% target.
At 12:27 p.m. ET, the Dow Jones Industrial Average was up 351.02 points, or 1.08%, at 32,747.19, the S&P 500 was up 53.19 points, or 1.30%, at 4,144.38, and the Nasdaq Composite was up 263.40 points, or 2.13%, at 12,612.16.
Moderna Inc surged 15.1% after the vaccine maker announced a $3 billion share buyback plan.
Regeneron Pharmaceuticals climbed 7.6% after it beat quarterly revenue estimates, while coffee chain Starbucks Corp rose 3.4% on upbeat quarterly profit.
Advancing issues outnumbered decliners by a 1.85-to-1 ratio on the NYSE and by a 2.29-to-1 ratio on the Nasdaq.
The S&P index recorded two new 52-week highs and 30 new lows, while the Nasdaq recorded 40 new highs and 27 new lows.
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