Stocks rally to reverse two-day slide, surging on rosy earnings results and economic data

All three major averages rallied Wednesday, reversing losses from earlier in the week.

The Dow Jones Industrial Average rose 416.33 points, or 1.29%, to 32,812.50. The S&P 500 gained 1.56% to 4,155.17, hitting its highest level since June. The Nasdaq Composite increased 2.59% to 12,668.16, boosted by rising tech stocks.

—Carmen Reinicke

The economy may be showing a classic recession sign, but it doesn’t feel that way for the jobs market.

Multiple data points regarding employment in the first half of the year don’t mesh with what usually happens during recessions, according to research that CNBC’s Steve Liesman gathered.

For one, payrolls usually decline during downturns, when they actually rose in the first of the year. Personal consumption also grew at a solid pace in the first six months, in contras with historical recession trends.

Still, GDP fell 1.6% in the first quarter and 0.9% in the second quarter, meeting a common definition of a recession.

—Jeff Cox

All three major averages continued their rallies, aiming to erase losses from a two-day slide earlier in the week, as stocks started their final hour of trading Wednesday. The Nasdaq Composite led gains, up 2.69%. The S&P 500 rose 1.75% and the Dow Jones Industrial Average added 478 points, or 1.48%

—Carmen Reinicke

The top stocks in the Dow Jones Industrial Average on Wednesday are two household names: Disney and Apple.

Shares of Disney rose more than 4%, making it the Dow’s top performer. It was followed closely by Apple, which ticked up nearly 4% during Wednesday’s session.

It appeared both stocks were lifted by positive market sentiment and an overall earnings season that has not been as bad as analysts feared. Apple reported quarterly results last week that beat expectations on profit and revenue. Disney is scheduled to report its quarter next week.

—Carmen Reinicke

A broad rally on Wall Street is being led by the Nasdaq Composite, which has jumped 2.6% today.

The top mover among major Nasdaq stocks is Moderna, which surged 16% on the back of a blowout earnings report. That move appears to be boosting other biotech stocks, with Gilead and Regeneron rising 6.1% and 5.8%, respectively.

Elsewhere, PayPal has gained more than 8% after the payments company reported strong earnings and a new information-sharing agreement with activist firm Elliott Management.

— Jesse Pound

The July rally for Wall Street appears to have resumed, as the S&P 500 is now up more than 13% from its recent low on June 16.

At its June low, the S&P 500 was down more than 23% from its record high, putting it firmly in bear market territory.

Now, the index is down about 13.4% from its high watermark.

The rally for stocks has also been accompanied by a rebound for bonds. The benchmark 10-year Treasury was trading near 2.77% on Wednesday, down from nearly 3.5% in mid-June.

— Jesse Pound

The S&P 500 rallied up 1.61% Wednesday, hitting its highest level since June. The gains also erased all losses from the average’s two-day slide earlier in the week.

Shares of Ford gained more than 3% in intraday trading Wednesday after the automaker released its July sales figures. The report showed new vehicle sales increased 36.3% on the year, where industry-wide estimates anticipated a slowdown.

John Kilduff of Again Capital called gasoline demand “depressed,” even though prices have been falling.

Kilduff said some traders had expected OPEC plus to add more oil to the market, but OPEC leader Saudi Arabia is near capacity. “The Saudis are actually pumping at the highest level since March, 2020. Over 11 million barrels a day,” Kilduff said.

—Patti Domm

All three major averages were near session highs midday Wednesday, shaking off a two-day slide.

The Dow Jones Industrial Average was up 336 points, or 1.04%. The S&P 500 gained 1.25% and the tech-heavy Nasdaq Composite increased 2.11%.

—Carmen Reinicke

Evercore ISI’s Julian Emanuel doesn’t think we’ve seen the bottom yet in the bear market, and will once again challenge June lows, even as investors remain ‘complacent’ after last month’s rally.

The strategist believes investors are overly optimistic, pointing to elevated options and meme stock trading, given slowing growth and troubling signs in bond yields that indicate more trouble ahead for equity markets.

“The falling yield story has likely run its course and that too, is a headwind for stocks, but the options market is telling you that people just aren’t really concerned about too much,” Emanuel said on CNBC’s “Squawk on the Street.”

“And that to us is much more typical of sort of late cycle August coming into September, which tends to be a dangerous month, type of behavior,” he added.

— Sarah Min

Shares of Robinhood surged more than 13% Wednesday, just a day after the company announced it would lay off about 23% of its workforce. It is the second time the company has said in recent months it will trim staff – it also cut 9% of its workforce in April.

But those job cuts will help the company going forward, boosting profitability and shares, analysts argued in notes following the news.

Read more on CNBC PRO.

—Carmen Reinicke

Chances of the June low being the start of a new bull market are increasing, data compiled by Ned Davis Research shows.

The firm noted that several breadth indicators show that the market’s performance since hitting an intraday low on June 17 is more indicative of a new bull starting — rather than another bear market rally. The S&P 500 is up more than 12% in that time frame.

Check out the full story on CNBC Pro.

—Fred Imbert

Treasury yields are continuing a rapid march higher, on hawkish comments from multiple Federal Reserve officials and after stronger-than-expected data on the services sector.

The benchmark 10-year yield was at a high of 2.81%, continuing the bounce started right after it touched a low of 2.52% Tuesday morning. That yield was ended last week at 2.65%. The 2-year yield, which most closely follows Fed policy, was at 3.14%, up sharply from Friday’s close of 2.89%.

“I think really the story here is markets were really embracing the idea that we’re going to have an imminent recession,” said Jan Nevruzi, NatWest Markets rate strategist. “That is just not showing up.”

ISM Services, released at 10 a.m. ET, came in above estimates at 56.7 from 55.3 in June.

Fed officials continued their hawkish comments Wednesday, after a parade of speakers drove rates sharply higher Tuesday. St. Louis Fed President James Bullard told CNBC Wednesday that he wants rates to get to 3.75%-4.00% this year.  That would be higher than the current Fed forecast for 3.25%-3.5%. 

The futures market had been pricing for a Fed pause in hiking but Fed officials have made clear their work is not done and inflation is still high. Bullard also said he does not currently see a recession. Some bond strategists said they believe yields may have set a near-term low Tuesday.

—Patti Domm

The major averages built on their earlier gains after the release of stronger-than-expected U.S. services data. The Dow Jones Industrial Average traded more than 200 points higher, or 0.8%. The S&P 500 gained 1%, and the Nasdaq Composite rallied 1.8%.

—Fred Imbert

Investors received some positive economic news on Wednesday morning.

The ISM non-manufacturing purchasing managers index showed a surprise rebound in July. The reading came in at 56.7, above 55.3 in June. Economists surveyed by Dow Jones were expecting 54.

June factory orders also came in better than expected, rising 2%. Economists surveyed by Dow Jones were expecting a gain of 1.2%.

— Jesse Pound

Wild trading in an obscure Hong Kong-based fintech firm is turning heads on Wall Street and sparking conversations about meme stock mania again.

AMTD Digital saw its shares skyrocket 126% Tuesday alone after experiencing a series of trading halts. It’s a subsidiary of investment holding firm AMTD Idea Group, went public in mid-July with its American depositary receipts trading on the NYSE. Two weeks later, the stock is up 21,400% to $1,679 apiece from its IPO price of $7.80.

“As we’ve learned over the past two years, events like this cause what I would say is opportunities for profit but great risk for loss particularly for our retail investors,” Jay Clayton, former SEC chairman, said on CNBC’s “Squawk Box” Wednesday.

— Yun Li

Stocks were higher at Wednesday’s open, rebounding after two days of losses. The S&P 500 gained 0.73%, the Nasdaq Composite rose 1.19% and the Dow Jones Industrial Average increased 221.31 points, or 0.68%.

— Carmen Reinicke

OPEC and its allies on Wednesday agreed to raise oil production by a small amount, 100,000 barrels per day, in response to President Joe Biden’s trip to Saudi Arabia last month. During the visit, Biden had aimed to persuade the group’s leader to pump more oil to help the U.S. economy and global supply. The miniscule raise is seen as a rebuff.

— Carmen Reinicke

Shares of Starbucks gained nearly 2% in premarket trading after the coffee chain posted quarterly earnings…