After ending Tuesday’s choppy trading session modestly higher, stocks showed a strong move to the upside during trading on Wednesday. The Dow and the S&P 500 set new record closing highs, with the latter reaching an intraday peak just shy of 5,000.

The major averages pulled back off their best levels going into the close but remained firmly positive. The S&P 500 climbed 40.83 points or 0.8 percent to4,995.06 and the Dow rose 156.00 points or 0.4 percent to 38,677.36, while the tech-heavy Nasdaq jumped 147.65 points or 1.0 percent to 15,756.64.

The strength on Wall Street may partly have reflected recent upward momentum, which helped stocks rally late last week despite waning optimism about the Federal Reserve cutting interest rates in March.

While CME Group’s FedWatch Tool suggests the chances of March rate cut are just 18.5 percent, the Fed is still expected to begin lowering rates sometime in the coming months.

Recent upbeat economic data has seemingly reduced the likelihood of a near-term rate cut but a strong economy is still seen as a net positive for stocks.

A positive reaction to some of the latest earnings news also contributed to notable advance seen over the course of the session.

Share of Enphase Energy (NASDAQ:ENPH) soared by 16.9 percent after the solar inverter maker reported weaker than expected fourth quarter revenues but said it expects demand to improve throughout 2024.

Auto giant Ford (NYSE:F) also surged by 6.1 percent after reporting better than expected fourth quarter results, providing upbeat guidance for 2024 and announcing a supplemental dividend of 18 cents per share.

On the other hand, shares of Snap (NYSE:SNAP) plummeted by 34.6 percent after the Snapchat parent reported mixed fourth quarter results and forecast first quarter sales below analyst estimates.

“We’re hip deep in company earnings and so far investors have been somewhat relieved that for the most part the news has been pretty positive in a season that had a big question mark hanging over it,” said Danni Hewson, head of financial analysis at AJ Bell.

In U.S. economic news, the Commerce Department released a report showing the U.S. trade deficit widened in the month of December.

The Commerce Department said the trade deficit increased to $62.2 billion in December from a revised $61.9 billion in November.

Economists had expected the trade deficit to narrow to $62.2 billion from the $63.2 billion originally reported for the previous month.

Sector News

Software stocks turned in some of the market’s best performances on the day, driving the Dow Jones U.S. Software Index up by 1.9 percent to a record closing high.

Significant strength was also visible among semiconductor stocks, as reflected by the 1.6 percent gain posted by the Philadelphia Semiconductor Index.

Steel and housing stocks also saw considerable strength, while biotechnology stocks showed a notable move to the downside.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Wednesday. China’s Shanghai Composite Index surged by 1.4 percent, while Hong Kong’s Hang Seng Index dipped by 0.3 percent and Japan’s Nikkei 225 Index edged down by 0.1 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the French CAC 40 Index fell by 0.4 percent, the German DAX Index and the U.K.’s FTSE 100 Index both slid by 0.7 percent.

In the bond market, treasuries showed a lack of direction over the course of the session before closing modestly lower. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by 2.0 basis points to 4.110 percent.

Looking Ahead

The U.S. economic calendar remains relatively quiet on Thursday, although a report on weekly jobless claims is likely to attract attention.

Trading could also be impacted by reaction to earnings news from Disney (NYSE:DIS), with the entertainment giant among the companies releasing their quarterly results after the close of today’s trading.

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