Key Takeaways
- S&P 500 and Nasdaq closed higher, driven by strong bank earnings and a chip stock rally.
- Morgan Stanley and Bank of America surged over 4% after beating profit estimates.
- U.S. Treasury Secretary Bessent eased trade war fears, stating Washington does not seek escalation.
- The Philadelphia Semiconductor Index jumped 3% on robust AI investment.
The S&P 500 climbed on Wednesday as solid bank earnings and reassuring comments from U.S. Treasury Secretary Scott Bessent on China trade tensions boosted investor sentiment. The benchmark index rose 0.40% to close at 6,671.06 points, while the Nasdaq gained 0.66%. The Dow Jones Industrial Average edged down slightly.
Banking Sector Leads Market Rally
Morgan Stanley shares jumped 4.7% to a record high, and Bank of America rose 4.4% after both lenders beat Wall Street profit estimates. The S&P 500 banking index registered its first three-day winning streak in over three weeks, rising 1.2%.
This week’s strong results from major banks signal robust health for U.S. corporations as the third-quarter earnings season begins. “People are spending, and the consumer seems to be fine. That’s been one of the messages from the bank earnings,” said Thomas Martin, senior portfolio manager at GLOBALT in Atlanta.
Chip Stocks Surge on AI Boom
The Philadelphia Semiconductor Index surged 3% after ASML reported better-than-expected third-quarter orders and operating income. ASML’s U.S. stock rallied 2.7% amid booming artificial intelligence investment.
In a major data center deal, a consortium including BlackRock, Microsoft and Nvidia will acquire one of the world’s largest data center operators in a $40 billion transaction. Shares of data center firms rose sharply, with Applied Digital posting significant gains.
Bessent’s Comments Ease Trade Fears
U.S. Treasury Secretary Scott Bessent told CNBC that Washington does not want to escalate trade conflicts with China. He emphasized that President Donald Trump is prepared to meet Chinese President Xi Jinping in South Korea later this month.
This reassurance came after Trump said Tuesday that Washington was considering cutting some trade ties with China, including cooking oil imports. Both nations had begun imposing tit-for-tat port fees earlier this week.
Fed Policy and Economic Indicators
Bessent also revealed he plans to present three or four Federal Reserve chief candidates to Trump after the Thanksgiving holiday. Fed Governor Stephen Miran stated that “two more cuts this year sounds realistic,” noting clear weakening in the labor market.
The Fed’s latest Beige Book report indicated some employers are cutting jobs due to economic uncertainty and increased AI investment. The report also highlighted strained labor supply in hospitality, agriculture, construction and manufacturing sectors due to immigration crackdowns.
Market Breadth and Individual Movers
Seven of the 11 S&P 500 sector indexes advanced, led by real estate (+1.5%) and utilities (+1.29%). Trading volume was heavy at 21.5 billion shares.
Among individual stocks, Abbott declined 2.4% on disappointing quarterly revenue, while Progressive Corp fell 5.8% after its results. Bunge jumped nearly 13% despite lowering its 2025 earnings forecast post-merger.
The S&P 500 recorded 34 new highs and 5 new lows, while the Nasdaq saw 154 new highs and 46 new lows.
