U.S. stocks rebounded on Wednesday as strong earnings results and economic optimism pushed the major averages higher as the trading day went on.
The Dow Jones Industrial average was up 137 points, after trading into the red earlier in the day. The S&P 500 gained 0.4%, also making up earlier losses. The Nasdaq Composite gained 0.5% as chip stocks and other major tech companies rebounded.
General Motors shares climbed 3.4% in early trading after earnings blew past expectations. Activision Blizzard traded higher by 3% after strong results.
Commodity stocks jumped with the Energy Select Sector SPDR and the Materials Select Sector SPDR notching the biggest gains among sectors.
Exercise equipment maker Peloton fell 9% after announcing a recall of its treadmill product due to safety concerns.
Private payrolls rose by 742,000 jobs in April, according to a Wednesday report from ADP. This result was below expectations of 800,000 jobs from economists surveyed by Dow Jones. ADP did revise its March report upward by 48,000 jobs.
On Tuesday, investors exited technology and growth stocks, pushing the Nasdaq Composite down 1.9%. Along with losses in Apple and Tesla, shares of Netflix lost 1.2%, and Microsoft dropped 1.6%. Amazon and Facebook shed 2.2% and 1.3%, respectively. Alphabet fell 1.6%.
The struggles for tech stocks come after a strong string of earnings for some of the biggest companies in the stock market failed to push the major indexes significantly higher.
“With the S&P 500 around 1% away from record highs, plenty of good news is priced into the market, so stocks look potentially vulnerable to disappointments,” UBS strategists said in a note.
There are a number of possible reasons for the downward pressure, including fears about rising inflation, concerns the Federal Reserve may have to taper monetary stimulus earlier than telegraphed, and the potential for tax hikes in the months ahead.
On Wednesday, The IHS Markit U.S. services purchasing managers index came in at 64.7 for April, ahead of the projected reading of 63.3, according to economists surveyed by Dow Jones. The ISM non-manufacturing index came in slightly under expectations at 62.7, however. PMIs are calculated such that readings above 50 represent expansion in an economic sector.
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