The S&P 500 Index ($SPX) (SPY) ended Wednesday up +0.37%, while the Dow Jones Industrial Average ($DOWI) (DIA) gained +0.48%, and the Nasdaq 100 Index ($IUXX) (QQQ) rose +0.72%. Futures also showed upward momentum, with December E-mini S&P (ESZ25) climbing +0.36% and December E-mini Nasdaq (NQZ25) advancing +0.60%. n nU.S. equity markets reversed early declines to finish higher, supported by encouraging economic indicators that reinforced confidence in the nation’s growth trajectory. The ADP private-sector employment report revealed stronger-than-anticipated job creation, while the ISM services index recorded its most robust expansion in eight months. Additional support came from semiconductor firms, which led sector gains and lifted broader market sentiment. n nAt the start of the session, major indexes dipped to their lowest levels in over a week, pressured by ongoing weakness in AI infrastructure stocks. Super Micro Computer dropped more than -10% after reporting Q1 net sales below forecasts, dragging down related equities. Rising Treasury yields also weighed on valuations, as the 10-year note yield climbed to a four-week peak of 4.159%, driven by upbeat economic data. n nThe U.S. Treasury confirmed plans to auction $125 billion in notes and bonds next week, in line with market expectations. Officials indicated no immediate plans to increase long-term debt issuance, instead leaning more on short-term T-bills to manage the fiscal shortfall. n nMortgage demand softened, with the MBA’s weekly index declining -1.9%. The purchase sub-index fell -0.6%, and refinancing activity dropped -2.8%. The average rate on a 30-year fixed mortgage edged up by one basis point to 6.31%. n nLabor and services data exceeded forecasts: October’s ADP employment change rose by +42,000, surpassing the expected +30,000. The ISM services index climbed +2.4 points to 52.4, marking the strongest reading in eight months. However, inflationary pressures intensified, as the prices paid sub-index jumped +0.6 to 70.0—a three-year high—contrary to expectations of a decline. n nMarkets are pricing in a 62% probability of a -25 basis point rate cut at the Federal Reserve’s December 9–10 meeting. Meanwhile, the Supreme Court expressed skepticism over the legality of former President Trump’s reciprocal tariffs, with justices questioning the use of emergency powers to impose levies. Lower courts have already ruled the tariffs unlawful under the 1977 International Emergency Economic Powers Act. If upheld, the ruling could require the government to refund over $80 billion in collected duties and restrict future tariff authority to established trade statutes like sections 232, 301, and 201. n nEarnings season remains solid, with 80% of the 136 S&P 500 companies reporting this week beating profit estimates—on pace for the strongest quarter since 2021. However, year-over-year profit growth is projected at +7.2%, the weakest in two years, and revenue growth is expected to slow to +5.9% from +6.4% in Q2. n nThe ongoing federal government shutdown, now in its sixth week, is the longest in U.S. history and continues to disrupt economic data releases and weigh on economic activity. n nGlobal markets were mixed: the Euro Stoxx 50 rose +0.16%, China’s Shanghai Composite gained +0.23%, while Japan’s Nikkei 225 fell -2.50%. n nIn fixed income, December 10-year T-notes (ZNZ5) dropped -14.5 ticks, pushing yields up +7.0 basis points to 4.155%, briefly touching 4.159%. The rise was fueled by strong labor and services data, which suggest a resilient economy, and by rising inflation expectations, with the 10-year breakeven rate reaching a 3.5-week high of 2.327%. However, the prolonged government shutdown may eventually pressure growth and support future rate cuts, offering underlying support to bond prices. n nEuropean yields increased: Germany’s 10-year bund finished at 2.673%, up +1.9 bp, while the UK’s 10-year gilt closed at 4.463%, up +3.7 bp. The Eurozone’s October S&P composite PMI was revised up to 52.5, the best in nearly 2.5 years. Meanwhile, September PPI declined -0.1% month-over-month and -0.2% year-over-year, slightly below expectations. German factory orders rose +1.1% in September, the largest gain in five months. The market assigns only a 4% chance of an ECB rate cut in December. n nChipmakers led equity gains: Seagate Technology (STX) surged over +11%, Micron (MU) climbed more than +9%, and Marvell (MRVL), Lam Research (LRCX), and Western Digital (WDC) each gained over +6%. ON Semiconductor (ON), Qualcomm (QCOM), and Applied Materials (AMAT) rose over +4%, while KLA (KLAC), GlobalFoundries (GFS), NXP (NXPI), Analog Devices (ADI), and Intel (INTC) advanced more than +3%. n nLumentum (LITE) jumped over +23% after reporting Q1 adjusted EPS of $1.10, above the $1.03 consensus, and issuing a strong Q2 outlook of $1.30–$1.50 versus $1.17 expected. Unity Software (U) rose over +18% on Q3 revenue of $470.6 million, beating $452.6 million, and guiding Q4 revenue to $480–$490 million, ahead of $477 million. Toast (TOST) gained over +10% on Q3 sales of $1.63 billion, above $1.59 billion. Johnson Controls (JCI) climbed over +8% on Q4 sales of $6.44 billion, exceeding $6.33 billion. Amgen (AMGN) rose over +7% after Q3 product sales reached $9.14 billion, well above $8.57 billion. AES Corp (AES) gained over +6% on Q3 revenue of $3.35 billion, stronger than $3.19 billion. Caterpillar (CAT) added over +4% after announcing plans to double gas turbine production capacity due to strong demand from data centers and AI infrastructure. n nOn the downside, Zimmer Biomet (ZBH) plunged over -15% after Q3 sales of $2.00 billion missed the $2.01 billion forecast. Axon Enterprise (AXON) dropped over -9% as adjusted EPS of $1.17 fell well short of $1.51. Pinterest (PINS) fell over -21% after forecasting Q4 revenue of $1.31–$1.34 billion, below the $1.34 billion consensus. Kratos Defense (KTOS) declined over -14% on a Q4 outlook of $320–$330 million, below $333.5 million. Super Micro Computer (SMCI) sank over -11% on Q1 sales of $5.02 billion, far below $6.09 billion. Arista Networks (ANET) fell over -8% after projecting gross margins of 62%–63%, below the 63.2% estimate. Humana (HUM) dropped over -5% after slashing its full-year EPS guidance to $12.26 from $13.77, significantly under the $14.69 consensus. n nUpcoming earnings include Air Products (APD), Airbnb (ABNB), Akamai (AKAM), Alliant Energy (LNT), AstraZeneca (AZN), Becton Dickinson (BDX), Block (XYZ), Camden Property Trust (CPT), ConocoPhillips (COP), Consolidated Edison (ED), Cummins (CMI), Datadog (DDOG), DuPont (DD), EOG Resources (EOG), EPAM Systems (EPAM), Evergy (EVRG), Expedia (EXPE), Gen Digital (GEN), Insulet (PODD), Mettler-Toledo (MTD), Microchip Technology (MCHP), Moderna (MRNA), Monster Beverage (MNST), News Corp (NWSA), NRG Energy (NRG), Parker-Hannifin (PH), Ralph Lauren (RL), Rockwell Automation (ROK), Solstice Advanced Materials (SOLS), Solventum (SOLV), Take-Two Interactive (TTWO), Tapestry (TPR), Trade Desk (TTD), Viatris (VTRS), Vistra (VST), Warner Bros Discovery (WBD), and Wynn Resorts (WYNN). n
— news from Nasdaq
— News Original —
Stocks Rally on Positive US Economic News and Strength in Chipmakers
The S&P 500 Index ($SPX) (SPY) on Wednesday closed up +0.37%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +0.48%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +0.72%. December E-mini S&P futures (ESZ25) rose +0.36%, and December E-mini Nasdaq futures (NQZ25) rose +0.60%. n nUS stock indexes recovered from early losses on Wednesday and rallied as signs of strength in the US economy bolstered optimism in the economic outlook. The monthly US ADP employment report showed private-sector employers added more jobs than expected, and activity in the US service sector expanded by the most in 8 months. Also, strength in chipmakers on Wednesday helped lift the broader market. n nJoin 200K+ Subscribers: Find out why the midday Barchart Brief newsletter is a must-read for thousands daily. n nStock indexes initially moved lower on Wednesday, with the S&P 500 and Nasdaq 100 posting 1.5-week lows. The correction in AI-infrastructure stocks continued on Wednesday, with Super Micro Computer falling more than -10% to lead the sector lower after reporting weaker-than-expected Q1 net sales. n nHigher T-note yields were also negative for stocks after better-than-expected US economic news on ADP employment and ISM services activity pushed the 10-year T-note yield to a 4-week high of 4.159% on Wednesday. n nThe US Treasury today announced $125 billion in sales of T-notes and T-bonds in next week’s quarterly refunding, right on expectations. The Treasury also said it’s not looking to boost sales of notes and bonds until well into next year and will increasingly rely on short-term T-bills to fund the budget deficit. n nUS MBA mortgage applications fell -1.9% in the week ended October 31, with the purchase mortgage sub-index down -0.6% and the refinancing sub-index down -2.8%. The average 30-year fixed rate mortgage rose +1 bp to 6.31% from 6.30% the prior week. n nThe US Oct ADP employment change rose by +42,000, stronger than expectations of +30,000. n nThe US Oct ISM services index rose +2.4 to 52.4, stronger than expectations of 50.8 and the fastest pace of expansion in 8 months. However, price pressures in the service sector accelerated after the Oct ISM services prices paid sub-index unexpectedly rose +0.6 to a 3-year high of 70.0, versus expectations of a decline to 68.0. n nThe markets are discounting a 62% chance of another -25 bp rate cut at the next FOMC meeting on December 9-10. n nThe US Supreme Court appeared skeptical on Wednesday about whether President Trump’s reciprocal tariffs are legal. Chief Justice Roberts and Justices Gorsuch and Coney questioned President Trump’s use of an emergency-powers law to collect tariffs, with Roberts saying the tariffs were an “imposition of taxes on Americans, and that has always been the core power of Congress.” The Supreme Court is expected to issue its ruling by late this year or early in 2026. Lower courts have already ruled that Mr. Trump’s reciprocal tariffs are illegal, finding they are based on a specious claim of emergency authority under the 1977 International Emergency Economic Powers Act. If the US Supreme Court upholds those rulings and strikes down the tariffs, then the US government may have to refund the reciprocal and fentanyl-linked tariffs already collected, totaling more than $80 billion, and Mr. Trump’s power to impose tariffs may be limited to well-founded sections of US trade law, such as sections 232, 301, and 201. n nQ3 corporate earnings season continues at a strong clip this week, with 136 of the S&P 500 companies reporting earnings this week. According to Bloomberg Intelligence, 80% of the S&P 500 companies that have reported so far have beaten forecasts, on course for the best quarter since 2021. However, Q3 profits are expected to have risen by +7.2% y/y, the smallest increase in two years. Also, Q3 sales growth is projected to slow to +5.9% y/y from +6.4% in Q2. n nThe US government shutdown, now in its sixth week, is the longest in history, weighing on market sentiment and the US economy. The government shutdown is delaying a host of government reports and is having an adverse effect on the US economy. n nOverseas stock markets settled mixed on Wednesday. The Euro Stoxx 50 closed up +0.16%. China’s Shanghai Composite recovered from a 1.5-week low and closed up +0.23%. Japan’s Nikkei Stock 225 fell to a 1.5-week low and closed down -2.50%. n nInterest Rates n nDecember 10-year T-notes (ZNZ5) on Wednesday closed down by -14.5 ticks. The 10-year T-note yield rose +7.0 bp to 4.155%. Dec T-notes gave up overnight gains and fell to a 4-week low, and the 10-year T-note yield rose to a 4-week high of 4.159%. T-notes retreated on Wednesday after the Oct ADP employment change showed private-sector employers added more jobs than expected last month and after the Oct ISM services sector expanded at its fastest pace in eight months, hawkish factors for Fed policy. Also, price pressures in the service sector are negative for T-notes after the Oct ISM services prices paid sub-index unexpectedly rose to a 3-year high. T-notes maintained their losses as inflation expectations rose, with the 10-year breakeven inflation rate hitting a 3.5-week high of 2.327% on Wednesday. n nT-note prices have underlying support from the ongoing US government shutdown, which is now the longest in history and could lead to additional job losses, reduced consumer spending, and a weakened US economy, potentially allowing the Fed to continue cutting interest rates. n nEuropean government bond yields moved higher on Wednesday. The 10-year German bund yield rose to a 3.5-week high of 2.678% and finished up +1.9 bp to 2.673%. The 10-year UK gilt yield rose to a 2-week high of 4.473% and finished up +3.7 bp to 4.463%. n nThe Eurozone Oct S&P composite PMI was revised upward by +0.3 to 52.5 from the previously reported 52.2, the strongest pace of expansion in nearly 2.5 years. n nEurozone Sep PPI fell -0.1% m/m and -0.2% y/y, slightly weaker than expectations of no change m/m and -0.2% y/y. n nGerman Sep factory orders rose +1.1% m/m, stronger than expectations of +0.9% m/m and the biggest increase in 5 months. n nSwaps are discounting a 4% chance for a -25 bp rate cut by the ECB at its next policy meeting on December 18. n nUS Stock Movers n nChip makers rallied on Wednesday, providing support to the overall market. Seagate Technology Holdings Plc (STX) closed up more than +11% to lead gainers in the S&P 500, and Micron Technology (MU) closed up more than +9%. Also, Marvell Technology (MRVL) closed up by more than +7%, and Lam Research (LRCX) and Western Digital Corp (WDC) closed up by more than +6%. In addition, ON Semiconductor (ON), Qualcomm (QCOM), Applied Materials (AMAT) closed up more than +4%, and KLA Corp (KLAC), GlobalFoundries (GFS), NXP Semiconductors NV (NXPI), Analog Devices (ADI), and Intel (INTC) closed up more than +3%. n nLumentum Holdings (LITE) closed up more than +23% after reporting Q1 adjusted EPS of $1.10, above the consensus of $1.03, and forecasting Q2 adjusted EPS of $1.30 to $1.50, stronger than the consensus of $1.17. n nUnity Software (U) closed up more than +18% after reporting Q3 revenue of $470.6 million, above the consensus of $452.6 million, and forecasting Q4 revenue of $480 million to $490 million, better than the consensus of $477 million. n nToast (TOST) closed up more than +10% after reporting Q3 revenue of $1.63 billion, better than the consensus of $1.59 billion. n nJohnson Controls International (JCI) closed up more than +8% after reporting Q4 net sales of $6.44 billion, better than the consensus of $6.33 billion. n nAmgen (AMGN) closed up more than +7% to lead gainers in the Dow Jones Industrials after reporting Q3 product sales of $9.14 billion, stronger than the consensus of $8.57 billion. n nAES Corp (AES) closed up more than +6% after reporting Q3 revenue of $3.35 billion, stronger than the consensus of $3.19 billion. n nCaterpillar (CAT) closed up more than +4% after it said it is seeing a record backlog in orders for gas turbines and plans to double its capacity to produce the turbines to satisfy demand for natural gas plants to power data centers and artificial intelligence. n nZimmer Biomet Holdings (ZBH) closed down more than -15% to lead losers in the S&P 500 after reporting Q3 net sales of $2.00 billion, weaker than the consensus of $2.01 billion. n nAxon Enterprise (AXON) closed down more than -9% to lead losers in the Nasdaq 100 after reporting Q3 adjusted EPS of $1.17, well below the consensus of $1.51. n nPinterest (PINS) closed down more than -21% after forecasting Q4 revenue of $1.31 billion to $1.34 billion, weaker than the consensus of $1.34 billion. n nKratos Defense & Security Solutions (KTOS) closed down more than -14% after forecasting Q4 revenue of $320 million to $330 million, weaker than the consensus of $333.5 million. n nSuper Micro Computer (SMCI) closed down more than -11% after reporting Q1 net sales of $5.02 billion, well below the consensus of $6.09 billion. n nArista Networks (ANET) closed down more than -8% after forecasting Q4 adjusted gross margin of 62% to 63%, below the consensus of 63.2%. n nHumana (HUM) closed down more than -5% after cutting its full-year EPS forecast to $12.26 from a previous forecast of $13.77, well below the consensus of $14.69. n nEarnings Reports(11/6/2025) n nAir Products and Chemicals Inc (APD), Airbnb Inc (ABNB), Akamai Technologies Inc (AKAM), Alliant Energy Corp (LNT), AstraZeneca PLC (AZN), Becton Dickinson & Co (BDX), Block Inc (XYZ), Camden Property Trust (CPT), ConocoPhillips (COP), Consolidated Edison Inc (ED), Cummins Inc (CMI), Datadog Inc (DDOG), DuPont de Nemours Inc (DD), EOG Resources Inc (EOG), EPAM Systems Inc (EPAM), Evergy Inc (EVRG), Expedia Group Inc (EXPE), Gen Digital Inc (GEN), Insulet Corp (PODD), Mettler-Toledo International I (MTD), Microchip Technology Inc (MCHP), Moderna Inc (MRNA), Monster Beverage Corp (MNST), News Corp (NWSA), NRG Energy Inc (NRG), Parker-Hannifin Corp (PH), Ralph Lauren Corp (RL), Rockwell Automation Inc (ROK), Solstice Advanced Materials In (SOLS), Solventum Corp (SOLV), Take-Two Interactive Software (TTWO), Tapestry Inc (TPR), Trade Desk Inc/The (TTD), Viatris Inc (VTRS), Vistra Corp (VST), Warner Bros Discovery Inc (WBD), Wynn Resorts Ltd (WYNN). n nOn the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here. n nMore news from Barchart n nNasdaq Futures Slip on Weak Tech Earnings and Valuation Concerns, U.S. ADP Jobs Report in Focus n nStock Index Futures Plunge on Valuation Concerns n nStocks Set to Extend Rally as Investors Await Key Earnings and Fed Speak n nEarnings, Manufacturing Data and Other Can’t Miss Items this Week n nThe views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.