U.S. stock indexes rose on Wednesday on strong results from PayPal and CVS Health, with investors awaiting services activity data for clues on the health of the economy struggling with soaring inflation and tightening financial conditions.
Shares of PayPal Holdings jumped 11.6% after the fintech company raised its annual profit guidance and said activist investor Elliott Management has an over $2 billion stake.
CVS Health Corp gained 4.7% as the largest U.S. pharmacy chain raised its annual profit forecast after posting strong quarterly results.
A largely upbeat second-quarter earnings season has helped markets bounce back in a year roiled by the Ukraine war, fears of a looming recession and an aggressive rise in borrowing costs.
The benchmark S&P 500 index and tech-heavy Nasdaq are up 13.3% and 18.2%, respectively, from the lows hit in mid-June.
The Institute of Supply Management’s data, due at 10 a.m. ET, is expected to show non-manufacturing activity slipped to 53.5 last month from 55.3 in June, the fourth straight monthly decline. The services sector accounts for more than two-thirds of U.S. economic activity.
“What we want is Goldilocks number, big numbers right now are bad, whether they’re big and good, or big and bad. What we actually want is pretty small increases or small decreases,” said Jason Blackwell, chief investment strategist at The Colony Group.
“That tells us that the Fed is working, (but) not too hard (to) take us into a deeper recession.”
Meanwhile, St. Louis Federal Reserve President James Bullard said on Wednesday the U.S. central bank will be steadfast in raising interest rates to bring inflation running at four-decade highs back to its 2% target.
Wall Street started August on a sour note as factory activity in the United States, China and Eurozone weakened in July.
At 9:40 a.m. ET, the Dow Jones Industrial Average was up 250.32 points, or 0.77%, at 32,646.49, the S&P 500 was up 34.03 points, or 0.83%, at 4,125.22, and the Nasdaq Composite was up 152.62 points, or 1.24%, at 12,501.38.
Moderna Inc climbed 8.7% after the vaccine maker announced a $3 billion share buyback plan.
Regeneron Pharmaceuticals added 5.3% after it beat quarterly revenue estimates, while coffee chain Starbucks Corp rose 1% on upbeat quarterly profit.
Advanced Micro Devices Inc fell 2.3% after the chip designer forecast downbeat third-quarter revenue.
Advancing issues outnumbered decliners by a 2.71-to-1 ratio on the NYSE and by a 2.62-to-1 ratio on the Nasdaq.
The S&P index recorded one new 52-week highs and 30 new lows, while the Nasdaq recorded 27 new highs and 10 new lows.