Wall Street rebounded on Wednesday as investors focused on earnings reports and the prospect of future interest rate cuts from the US Federal Reserve. The Dow Jones Industrial Average rose 0.71%, while the S&P 500 gained 0.39% and the Nasdaq Composite climbed 0.19%.
Alphabet, Google’s parent company, fell 7.3% after posting downbeat cloud revenue growth and announcing a $75 billion investment in artificial intelligence (AI) this year. However, some AI-related stocks showed signs of recovery, including Nvidia, which rose 5.4%, and Broadcom, which gained 4.3%.
Advanced Micro Devices (AMD), meanwhile, fell 6.3% after CEO Lisa Su warned that the company’s current-quarter data center sales would drop about 7% from the previous quarter.
The market’s focus on earnings reports and rate cuts led to a decrease in volatility, with the Cboe Volatility Index dropping 7.9% to 15.85.
Investors are also looking ahead to the January nonfarm payrolls report, expected to be released on Friday. The US services sector activity unexpectedly slowed in January, helping curb price growth, according to a report from the Institute for Supply Management.
The Federal Reserve’s next meeting is in March, and while only 16.5% of traders expect a rate cut then, a majority anticipate a cut in June, according to CME’s FedWatch Tool. Richmond Fed president Thomas Barkin said the Fed was still leaning towards more rate cuts this year but flagged uncertainty around new tariffs, immigration, regulations, and other initiatives from the Trump administration.
The Dow Jones Industrial Average rose 317.24 points, while the S&P 500 gained 23.60 points, and the Nasdaq Composite climbed 38.32 points. Eight of the S&P 500 sectors traded higher, with real estate leading the gains.
Source: https://www.reuters.com/markets/us/nasdaq-futures-lag-alphabet-amd-slide-after-bleak-forecasts-2025-02-05