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US stocks rose on Wednesday, buoyed by tentative optimism for interest rate cuts amid signs of slowing labor demand and a cooling economy.
The S&P 500 (^GSPC) rose nearly 0.9%, while the tech-heavy Nasdaq Composite (^IXIC) led the gains, popping about 1.6%. Meanwhile, the Dow Jones Industrial Average (^DJI) gained about 0.2%.
Tech was the clear leader on Wednesday, with megacaps Nvidia (NVDA) and Meta (META) rising more than 2% while Alphabet (GOOGL, GOOG) popped about 1%.
Stocks have had a bumpy ride as the market wavers over whether to interpret a softening in economic readings as a positive sign for the chances of rate cuts from the Federal Reserve or a negative sign signaling the start of a broader slowdown.
Data out Tuesday showed job openings fell to a three-year low in April. Cracks in the labor market could spur the Fed to begin lowering borrowing costs, but they are also a sign the economy could be headed for recession rather than a soft landing.
That said, hopes for a Fed shift appear to be growing. About 65% of traders now expect policymakers to reduce the benchmark rate at their September meeting, compared with less than 50% a week ago, according to the CME FedWatch tool.
The ADP private payrolls report released Wednesday provided the latest evidence of labor market cooling, as private-sector growth for May came in below estimates. The bigger focus, though, is firmly on the labor data highlight of the week, the key monthly jobs report coming Friday.
In individual movers, Hewlett Packard Enterprise (HPE) shares rose about 12%, setting the stock up for its biggest gain since 2016. The surge came after HPE posted a revenue beat fueled by a jump in sales of AI-focused servers.
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