The Nasdaq rose to almost three-month highs on Wednesday as increases in major technology companies helped allay concerns about a potential recession brought on by recent data on the services sector and new orders.
In a mainly positive second quarter that helped markets recover from the effects of the Ukraine crisis, increasing inflation, and an increase in borrowing costs, a fresh batch of solid results from PayPal and CVS Health Corp. further buoyed morale.
Microsoft Corp. and Apple Inc. also saw gains of 2.7% and 3.5%, respectively, helping the broader growth stocks index outperform its value counterpart.
Kim Forrest, chief investment officer at Bokeh Capital Management, advised investors to switch from value equities to growth ones if the economy was neither entering a recession nor galloping higher at the moment.
As the fintech company increased its forecast for yearly profits and disclosed that activist investor Elliott Management holds a stake worth over $2 billion, PayPal Holdings saw a 9.5 percent increase.
Following the release of solid quarterly earnings, the largest U.S. pharmacy chain, CVS Health Corp, saw a gain of 5.4 percent.
Although they have increased significantly from their mid-June lows, the benchmark S&P 500 index and the tech-heavy Nasdaq are still in a bear market.
As manufacturing activity in the United States, China, and Eurozone declined in July, Wall Street got off to a bad start in August. Worries subsided on Wednesday, however, as the unexpected recovery in the services sector—which makes up more than two-thirds of the economy—of the United States.
It increased to 56.7 in July from 55.3 in June as a result of strong order growth, easing supply constraints and price pressures. A different study revealed that new orders for products made in the United States rose significantly in June.
According to economists at Wells Fargo, “(today’s) statistics further support our view that service-sector activity will hold up well in the short term.”