U.S. Stocks Pull Back Off Early Highs But Close Firmly Positive

Stocks showed a strong move to the upside in early trading on Wednesday before giving back some ground over the course of the session. The major averages pulled back well off their highs of the session but managed to end the day firmly in positive territory.

Adding to the modest gains posted during Tuesday’s session, the Nasdaq advanced 175.25 points or 0.8 percent to 22,753.63, the S&P 500 climbed 38.09 points or 0.6 percent to 6,881.31 and the Dow rose 129.47 points or 0.3 percent to 49,662.66.

The early strength on Wall Street came as shares of Nvidia (NVDA) surged after the AI chipmaker announced a multi-year, multi-generational strategic partnership with Facebook parent Meta (META) spanning on-premises, cloud and AI infrastructure.

The company said the partnership will enable the large-scale deployment of Nvidia CPUs and millions of Nvidia Blackwell and Rubin GPUs.

After jumping by as much as 2.9 percent, Nvidia pulled back well off its best levels of the day but still closed up by 1.6 percent.

Shares of Micron (MU) also spiked by 5.3 percent on news David Tepper’s Appaloosa Management has increased its holdings in the chipmaker by 200 percent.

Positive sentiment may also have been generated in reaction to some upbeat U.S. economic data, including a report from the Federal Reserve showing industrial production increased by more than expected in the month of January.

However, stocks pulled back off their highs following the release of the minutes of the Fed’s latest monetary policy meeting, which revealed officials remain divided about the outlook for interest rates.

The minutes of the Fed’s January 27-28 meeting said several participants felt further rate cuts would likely be appropriate if inflation were to decline in line with their expectations.

However, others believed it would likely be appropriate to leave rates unchanged for “some time” as the Fed carefully assesses incoming data.

A number of these participants judged that additional policy easing may not be warranted until there was clear indication that the progress of disinflation was firmly back on track, the Fed said.

The Fed noted several participants even supported a two-sided description of the outlook for rates, reflecting the possibility that rate increases could be appropriate if inflation remains at above-target levels.

Sector News

With the price of crude oil skyrocketing, oil service stocks turned in some of the market’s best performances on the day, resulting in a 2.7 percent surge by the Philadelphia Oil Service Index.

Gold stocks also saw significant strength amid a sharp increase by the price of the precious metal, driving the NYSE Arca Gold Bugs Index up by 2.5 percent.

Oil producer, financial and transportation stocks also turned in strong performances, while interest rate-sensitive utilities and commercial real estate stocks moved to the downside.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Wednesday, with several markets still closed for holidays. Japan’s Nikkei 225 Index jumped by 1.0 percent, while Australia’s S&P/ASX 200 Index climbed by 0.5 percent.

The major European markets have also moved to the upside on the day. While the U.K.’s FTSE 100 Index surged by 1.2 percent, the German DAX Index shot up by 1.1 percent and the French CAC 40 Index advanced by 0.8 percent.

In the bond market, treasuries moved lower after ending the previous session nearly unchanged. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 2.7 basis points to 4.079 percent.

Looking Ahead

Trading on Thursday may be impacted by reaction to a slew of U.S. economic data, including reports on weekly jobless claims, the trade deficit and pending home sales.

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