S&P500: US Indices Gain on Rate-Cut Hopes Despite Tech Stocks Pressure Today

S&P 500 inches higher as rate-cut expectations offset tech weakness

Stocks pushed modestly higher shortly after the mid-session on Wednesday, with traders leaning into stronger expectations for a Federal Reserve rate cut next week. Softer private-sector employment data and steady U.S. services activity supported the view that policy easing is near, helping the S&P 500 and Dow stay in positive territory even as large-cap tech weighed on the Nasdaq.

Microsoft remained the central drag after early reports suggested the company had reduced AI-linked software sales quotas. Shares fell sharply before trimming losses to about 1.8% once the company denied the quota change. The headline pressure spilled into semiconductors, leaving Nvidia, Broadcom, Micron, and several storage-focused names under pressure.

Which sectors showed the strongest interest?

Energy, financials, and consumer discretionary led the market’s advance. Energy added 1.84% as traders positioned for firmer demand expectations, while financials climbed 1.18% on rising confidence in a near-term rate cut. Consumer discretionary gained 0.7%. Technology lagged, down 0.3%, as investors briefly rotated away from mega-cap names following the Microsoft drag. Utilities and real estate also slipped slightly.

Which stocks delivered notable gains?

Microchip Technology topped the S&P 500 after raising its third-quarter outlook, jumping more than 8%. ON Semiconductor, NXP Semiconductors, United Airlines, Robinhood, Humana, Bristol-Myers Squibb, and Vertex Pharmaceuticals all posted strong gains. Marvell Technology rose 4.5% after announcing a $3.25 billion acquisition of Celestial AI, underscoring continued deal activity in the semiconductor space. Retail standout American Eagle surged 15.4% after lifting its annual comparable-sales outlook.

Where did selling pressure concentrate?

Declines were concentrated in storage and media names. Sandisk, Netflix, Seagate, Western Digital, Paramount Skydance, Boeing, Cencora, Healthpeak Properties, First Solar, LyondellBasell, and PayPal all traded lower. The weakness reflected cautious sentiment ahead of Friday’s PCE inflation release, which remains central to traders’ expectations for next week’s Fed decision.

What are traders pricing in now?

ADP data showed an unexpected drop in private payrolls, reinforcing the probability of a 25-basis-point cut next week. FedWatch readings climbed to 89% as traders looked to upcoming inflation data for confirmation. A report suggesting that Fed chair candidate interviews were canceled added to expectations that Kevin Hassett—viewed as supportive of rate cuts—may replace Jerome Powell next May.

Short-term outlook: Broader sector participation and strong small-cap performance keep market sentiment constructive, though tech remains a swing factor ahead of the PCE report.

Technically, the Dow Jones Industrial Average broke out of two-days of consolidation to put itself in a position to test the record high at 48431.57. The market is being supported by a short-term 50% level at 47080.25 and the 50-day moving average at 46825.30.

More Information in our Economic Calendar.