U.S. stocks ended sharply higher Wednesday, with the Nasdaq and S&P 500 jumping more than 1% each as upbeat outlooks from Micron Technology and other companies eased some worries about the economy.
Micron shares rose, boosting the Nasdaq and S&P 500, and leading gains in the PHLX semiconductor index.
The memory chip maker late Tuesday forecast a drop in third-quarter revenue in line with Wall Street expectations, while it gave a rosy outlook for 2025 with artificial intelligence boosting sales.
Adding to the optimism, Lululemon Athletica Inc. jumped after an upbeat annual results forecast.
"We had a couple of good reads into the economy from a couple of companies," said King Lip, chief investment strategist at BakerAvenue Wealth Management in San Francisco.
"The big one is Micron Technology," Lip said. "Micron is sort of a microcosm of the global economy because their chips go into so many different industries and sectors. If they are optimistic about things in terms of orders, that means the overall economy is doing well."
The bulk of S&P 500 companies begin reporting on the first quarter after mid-April.
Investors are also trying to gauge whether turmoil in the banking system may be subsiding, and what that may mean for Federal Reserve policy.
"People are feeling a little more comfortable with each day that passes since we had the failures," said Michael O’Rourke, chief market strategist at JonesTrading in Stamford, Connecticut.
According to preliminary data, the S&P 500 gained 56.13 points, or 1.41%, to end at 4,027.40 points, while the Nasdaq Composite gained 210.16 points, or 1.79%, to 11,926.24. The Dow Jones Industrial Average rose 327.24 points, or 0.99%, to 32,721.49.
The banking turmoil, which started earlier in March with the collapse of Silicon Valley Bank, caused a swift selloff in the sector shares and fueled jitters about the strength of the economy.
Michael Barr, Fed Vice Chair for Supervision, told Congress the scope of blame for Silicon Valley Bank's failure stretches across bank executives.
Personal Consumption Expenditures data on Friday is the next key U.S. economic report.
The Fed has been raising interest rates to control inflation.
The CBoe volatility index, Wall Street's fear gauge, fell.
© 2023 Thomson/Reuters. All rights reserved.