'Bad News Is Good News' Motif Boosts Stocks, Bonds Amid Easing Rate Hike Anxiety: What's Driving Markets Wednesday?

Wall Street continues to rake in gains in Wednesday’s session as lackluster economic data further reinforces expectations that the Federal Reserve might be on the brink of wrapping up its rate hike cycle.

Second-quarter GDP growth, as per the second estimate released Wednesday, was revised downward from 2.4% to 2.1% on a quarter-on-quarter annualized rate. Additionally, the ADP employment report indicated a smaller-than-expected increase in jobs in August (177,000 vs 195,000).

The implied probabilities derived from the money market regarding further Fed rate hikes have plummeted to 9.5% for the September meeting and 42% for the November meeting.

Cues From Wednesday’s Trading:

The S&P 500 Index rose 0.4% to the highest level since Aug. 10, eyeing its fourth straight session of gains.

The Dow edged marginally higher by 0.1%, underperforming in relative terms. Both the technology sector and small-cap stocks took the lead, showcasing strong performance. The Nasdaq 100 and the Russell 2000 both exhibited a notable 0.6% rise.

US Index Performance On Tuesday

Wednesday’s Trading In Major US Equity ETFs

• The SPDR S&P 500 ETF Trust SPY was 0.4% higher to $540.90.
• The SPDR Dow Jones Industrial Average ETF DIA rose 0.2% to $349.30. 
• The Invesco QQQ Trust QQQ gained 0.55% to $376.84, according to Benzinga Pro data.

Looking at S&P 500’sectors:

• The Technology Select Sector SPDR Fund XLK led gains, up 0.6% for the day. A similar performance was observed in the Consumer Discretionary Select Sector SPDR Fund XLY. 
• The Utilities Select Sector SPDR Fund XLU was the laggard, down 0.4%.

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Stocks In Focus:

• HP Inc. HPQ which reported its quarterly results Tuesday after the close, fell 8%.
• AMC Entertainment Holdings, Inc. AMC rose 23% on continued volatility after the company’s reverse stock split took effect last week.
• Insulet Corp. PODD rose 10% after Chief Executive James Hollingshead acquired 5,550 additional shares in the company. 
• Other stocks reacting to their quarterly results include Box, Inc. BOX, down over 9%, and Ambarella, Inc. AMBA, down nearly 18%.
The companies reporting after the close Wednesday are Salesforce, Inc. CRM, CrowdStrike Holdings, Inc. CRWD, Okta, Inc. OKTA, Chewy, Inc. CHWY, The Cooper Companies, Inc. COOand Victoria’s Secret & Co. VSCO. 

Commodities, Bonds, Other Global Equity Markets:

Crude oil fell 0.3%, with a barrel of WTI-grade crude trading at $80. The United States Oil Fund ETF USO was 0.2% lower to $73.  

Treasury yields were slightly lower, with the 10-year yield at 4.11% and the two-year yield at 4.87%. The iShares 20+ Year Treasury Bond ETF TLT was 0.2% lower for the day. 

The dollar fell, with the U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF UUP, down 0.3%. The EUR/USD pair, which is tracked by the Invesco CurrecyShares Euro Currency Trust FXE, was 0.4% higher to 1.0922.

European equity indices had a negative session. The SPDR DJ Euro STOXX 50 Etf  FEZ closed flat for the day.

Gold edged 0.3% higher to $1,943/oz, while silver fell 0.3% to $24.60. Bitcoin BTC/USD was 2% lower to $27,137.

Staff writer Piero Cingari updated this report midday Wednesday. 

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