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U.S. Stocks See Further Upside After Early Advance

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After moving mostly higher early in the session, stocks have seen further upside over the course of the trading day on Wednesday. The major averages are rebounding following the pullback seen over the two previous sessions, with the tech-heavy Nasdaq reaching its best intraday level in almost three months.

Currently, the major averages are just off their highs of the session. The Nasdaq is up 311.60 points or 2.5 percent at 12,660.35, the S&P 500 is up 63.47 points or 1.6 percent at 4,154.66 and the Dow is up 424.59 points or 1.3 percent at 32,820.76.

The strength on Wall Street partly reflects a positive reaction to some upbeat U.S. economic data, which has helped ease concerns about a recession.

A report released by the Institute for Supply Management showed an unexpected acceleration in the pace of growth in U.S. services sector activity in the month of July.

The ISM said its services PMI rose to 56.7 in July from 55.3 in June, with a reading above 50 indicating growth in the sector. The uptick came as a surprise to economists, who had expected the index to dip to 53.5.

The unexpected increase by the services PMI came after the index edged down to its lowest reading since May 2020 in the previous month.

"Looking ahead, services activity will be fairly muted as hot inflation, tighter financial conditions, supply chain stress, downbeat sentiment and softening spending restrain growth," said Oren Klachkin, Lead US Economist at Oxford Economics.

"The recovery's best days are clearly in the rear-view mirror, but this doesn't mean an economic downturn has begun," he added. "We think fundamentals are strong enough to prevent a recession this year, though the window to achieving a softish landing is narrowing."

A separate report from the Commerce Department showed a significant increase in new orders for U.S. manufactured goods in the month of June.

The report showed factory orders shot up by 2.0 percent in June after surging by an upwardly revised 1.8 percent in May.

Economists had expected factory orders to advance by 1.1 percent compared to the 1.6 percent jump originally reported for the previous month.

Sector News

Biotechnology stocks continue to see substantial strength on the day, with the NYSE Arca Biotechnology Index surging by 4.1 percent to its best intraday level in over three months.

Moderna (MRNA) has helped lead the biotech sector higher, spiking by 16.1 percent after reporting better than expected second quarter results.

Significant strength also remains visible among airline stocks, as reflected by the 3.4 percent jump by the NYSE Arca Airline Index.

Brokerage stocks are also turning in a strong performance on the day, driving the NYSE Arca Broker/Dealer Index up by 2.3 percent to a three-month intraday high.

Retail, semiconductor and banking stocks are also seeing considerable strength, while gold and energy stocks are bucking the uptrend amid decreases in commodities prices.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Japan's Nikkei 225 Index rose by 0.5 percent, while China's Shanghai Composite Index slid by 0.7 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the U.K.'s FTSE 100 Index climbed by 0.5 percent, the French CAC 40 Index and the German DAX Index both jumped by 1.0 percent.

In the bond market, treasuries have climbed well off their worst levels but remain in negative territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 3.1 basis points at 2.772 percent.

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