The stock market enjoyed a broad rebound in the midweek session after rising oil prices and Treasury yields pressured equities through the first two sessions of the week. While both remain elevated, relative stability in crude oil and yields today provided some relief for equities, helping the S&P 500 (+0.5%), Nasdaq Composite (+0.5%), and DJIA (+0.6%) recoup a portion of their recent losses. The Russell 2000 (+1.2%) and S&P Mid Cap 400 (+0.7%) posted even stronger gains.

WTI crude settled $0.68 higher (+0.8%) at $90.96 per barrel, remaining below its overnight high near $92, while the 10-year note yield finished unchanged at 4.80% after reaching 4.82% overnight. The relatively contained moves in both stood in contrast to the sharper increases that pressured equities earlier in the week, helping create a more supportive backdrop for Wednesday's rebound.

The strength was widespread, with ten of the 11 S&P 500 sectors finishing higher. The S&P 500 Equal Weighted Index (+0.6%) matched the gain in its market-cap-weighted counterpart, while the outperformance of the Russell 2000 provided another indication of solid participation beyond the largest stocks.

Several cyclical areas were among the beneficiaries of the broader rebound. The materials sector (+1.5%) finished atop the sector standings, supported by strength in steel names such as Steel Dynamics (STLD 247.64, +13.55, +5.79%) amid some focus on U.S.-Canada trade negotiations, while other metals names also outperformed.

The financials sector (+0.8%) also participated in the advance, with several of its largest components contributing to the outperformance of the DJIA.

Meanwhile, the communication services sector (+1.3%) was another source of strength, with Charter Comm (CHTR 158.97, +12.78, +8.74%) and Reddit (RDDT 158.11, +13.47, +9.31%) among the day's stronger S&P 500 performers and the sector's mega-cap components also contributing to the advance.

The information technology sector (+0.3%) finished with a modest gain despite a sharp divide beneath the surface. Semiconductor stocks provided support, lifting the PHLX Semiconductor Index 0.5% as NVIDIA (NVDA 224.40, +6.96, +3.20%) posted a solid gain. Attention now turns to Broadcom's (AVGO 367.24, -2.44, -0.66%) earnings report after the close, with investors looking for further evidence that strong AI demand can support the company's ambitious growth expectations.

Dell (DELL 492.00, +67.00, +15.76%) was another notable technology winner following its better-than-expected earnings report. The company delivered a sizable earnings beat and raised its FY27 AI-Optimized Servers revenue outlook to $74 billion from $60 billion, reinforcing expectations for continued strength in AI infrastructure demand. The results also provided a positive read-through for Hewlett Packard Enterprise (HPE 51.86, +0.98, +1.94%), which moved higher ahead of its own earnings report after the close.

Software stocks moved sharply in the opposite direction, leaving the iShares Expanded Tech-Software Sector ETF down 2.6% and extending what has already been a difficult week for the group. Palo Alto Networks (PANW 328.39, -33.70, -9.31%) fell sharply despite beating Q4 expectations and issuing an above-consensus FY27 outlook, with its negative reaction appearing more reflective of elevated expectations than a meaningful deterioration in underlying execution. MongoDB (MDB 375.40, -58.81, -13.54%) also struggled following its earnings report, while Palantir Technologies (PLTR 169.44, -10.48, -5.83%) and CrowdStrike (CRWD 203.42, -11.65, -5.42%) added to the broader software weakness.

The real estate sector (-0.8%) was the lone S&P 500 sector to finish in negative territory, providing one of the few areas of weakness in an otherwise broadly positive session.

On the policy front, the Federal Reserve's Beige Book indicated that economic activity continued to expand modestly since early July, with the outlook remaining positive despite uncertainty surrounding higher energy prices, policy developments, and international conflicts. The 10-year note yield showed little reaction to the report and remained at 4.80%.

Ultimately, Wednesday's rebound provided some relief following the weakness that began the week. The absence of another sharp increase in crude oil or Treasury yields allowed buying interest to broaden across nearly the entire sector lineup, with smaller-cap stocks also participating in the advance. Persistent software weakness remained a notable blemish, but strength across several other areas helped the market recover a portion of its recent losses.

U.S. Treasuries finished Wednesday near their unchanged levels, but the flat finish masked a brief morning dip that sent yields on the 10-year note and shorter tenors to fresh highs for the year. The 2-year note yield finished unchanged at 4.39%, and the 10-year note yield finished unchanged at 4.80%. 

• Russell 2000: +19.0% YTD
• S&P Mid Cap 400: +13.4% YTD
• Nasdaq Composite: +12.8% YTD
• S&P 500: +12.0% YTD
• DJIA: +10.4% YTD

Reviewing today's data:

• Weekly MBA Mortgage Applications Index 0.8%; Prior -1.0%
• August ADP Employment Change 38K (Briefing.com consensus 47K); Prior was revised to 46K from 44K
• July Factory Orders 0.9% (Briefing.com consensus 0.6%); Prior was revised to -0.2% from -0.3%
  • The key takeaway from the report is that factory orders were running at a good clip in July for durable and nondurable goods. Although business spending was flat, that was likely just a normal slowdown from the solid increases registered in May and June.