Wall Street ends higher as stocks reclaim some shine

Wall Street saw a partial bounce back on Wednesday, marking a brief recovery from a three-day losing streak. All three major US stock indexes enjoyed gains, with small-cap indices leading the charge. The Russell 2000, which tracks smaller companies, outperformed its larger-cap counterparts, surging 1.1%.

The sectors that drove the rally included airlines, gold and silver miners, and regional banks. However, software and services companies, often viewed as victims of AI disruption, lagged behind on the day. The Philadelphia Semiconductor Index, which has powered much of the stock market's gains this year but has lost nearly a quarter of its value since late June, showed signs of rebound, with chipmaker Broadcom set to release its second-quarter results after the market close.

Nvidia, a leading player in the AI wave, gained 3.2%, while Micron and Qualcomm rose by 2.4% and 2.0%, respectively. At the same time, the ongoing conflict between the US and Iran has kept bond selloffs alive, driven by concerns over inflation, mounting government debt, and escalating energy prices. The war appears to be longer-lasting than anticipated, with some experts predicting that when it ends, energy prices will begin to cool and inflation will become less of a concern.

Lauren Cassidy, chief investment officer at Founders 100 ETF in Dallas, noted that while the war continues, the recent record earnings season and the accelerating adoption of AI provide a positive outlook. AI adoption is still in its early stages, and Cassidy believes we could see exponential growth from this point forward.

Among the S&P 500's 11 major sectors, materials experienced the most significant percentage gains, while real estate was the only sector to record a percentage loss. Hardware giant Dell saw its shares advance 15.8% after raising its annual profit and revenue forecast. Meanwhile, Brown-Forman, the maker of Jack Daniel's, rose 3.9% after surpassing its quarterly profit expectations.

Despite the gains, bond selloffs continue to weigh on markets, fueled by worries about inflation, widening government debt, and escalating tensions in the Middle East. These factors have put upward pressure on energy prices and kept the market on edge. Meanwhile, the ADP report showed fewer-than-expected private sector job additions in August, and new orders for core capital goods were revised downward, hinting at a potential slowdown in US corporate spending plans.

Economic reports on Thursday will include payrolls data, second-quarter labour costs/productivity, and services PMI.