Wall Street Edges Up as Tech Gains Offset Economic and Tariff Concerns

U.S. stock markets saw modest gains on Wednesday, buoyed by strength in technology shares despite a slew of troubling economic indicators. The Dow Jones Industrial Average rose by 0.20%, the S&P 500 by 0.29%, and the Nasdaq Composite by 0.31%. This upward momentum was mainly driven by positive performance in tech and communication sectors, even as disappointing data from the services sector and labor market signaled a slowdown in the broader economy.

The U.S. services sector contracted for the first time in nearly a year, and businesses faced rising input costs, stoking fears of continued slow growth and persistent inflation. Additionally, the ADP employment report showed the smallest monthly private job gains in over two years, intensifying concerns ahead of Friday’s official nonfarm payrolls release. Despite this, analysts suggest investors are waiting for more comprehensive labor data before making strong market moves.

Meanwhile, tariff tensions escalated as the U.S. doubled steel and aluminum import tariffs to 50%, part of President Trump’s pressure tactics in ongoing trade negotiations. Market participants are closely watching potential developments in talks between Washington and Beijing, particularly a possible conversation between President Trump and Chinese President Xi Jinping later this week. Uncertainty surrounding trade remains a dominant force affecting investor sentiment.

Tech stocks led the market higher, with gains in companies like Hewlett Packard Enterprise and GlobalFoundries. HPE rose on strong AI and cloud demand, while GlobalFoundries gained after announcing expanded investment plans. However, the tech sector was not without its setbacks: Tesla shares dropped 3.8% amid declining European sales, and CrowdStrike slumped nearly 5% following a weaker-than-expected revenue forecast.

In broader market activity, eight of the eleven S&P 500 sectors ended in the green, and major indexes neared record highs. Wells Fargo climbed after the Federal Reserve lifted a long-standing asset cap, and investor optimism led to more stocks hitting new 52-week highs than lows. Despite lingering macroeconomic and trade-related pressures, Wall Street remained resilient, buoyed by the tech rally and cautious optimism over future earnings growth.

Source: Reuters