On Wednesday, U.S. stock markets experienced a notable upturn, with the S&P 500 index climbing more than 1% amid developments that eased trade tensions and improved overall investor sentiment. This positive movement came largely in response to President Donald Trump's decision to retract previously announced tariff measures targeting European Union nations. The president made this announcement after a meeting with NATO Secretary General Mark Rutte, which he described as "very productive," effectively halting the implementation of these tariffs that had raised concerns among global markets.
Investor optimism was further bolstered by corporate earnings reports. Johnson & Johnson (NYSE: JNJ) delivered better-than-expected gains in its fourth-quarter results, providing a favorable signal to the health care sector. Meanwhile, Netflix Inc. (NASDAQ: NFLX) experienced a nearly 2% decline in share value following their release of fourth-quarter financials and cautious guidance for the upcoming first quarter, which missed analysts' forecasts.
From an economic data standpoint, figures released on Wednesday painted a mixed picture of the U.S. housing and construction sectors. Pending home sales experienced a significant drop of 9.3% in December compared to the previous month, reversing the 3.3% gain recorded in November and markedly exceeding market expectations for a more modest 0.3% decline. Conversely, construction spending increased by 0.5% in October, which was slightly lower than both the 0.6% gain in September and the 0.1% rise anticipated by economists.
All major sectors within the S&P 500 closed in positive territory, led by the energy, materials, and health care industries which registered the largest gains during the day’s trading session. The Dow Jones Industrial Average reflected this upward momentum, finishing approximately 589 points higher at 49,077.23. Similarly, the Nasdaq Composite index rose 1.18%, ending at 23,224.82.
Market participants are now looking ahead to upcoming earnings announcements from Abbott Laboratories (NYSE: ABT), Procter & Gamble Co (NYSE: PG), and Intel Corp (NASDAQ: INTC), all scheduled for release during the current trading day, which could further influence market dynamics.
The CNN Business Fear & Greed Index, which gauges prevailing market sentiment through seven equal-weighted indicators ranging from 0 to 100, registered a reading of 50.4 on Wednesday. This reflects an increase from the prior session’s 46.4, signifying a shift to a "Neutral" zone where investor emotions are balanced between fear and greed. The index operates on the premise that elevated fear pressures stock prices downward, while heightened greed exerts upward influence. The current neutral reading indicates a temporary equilibrium in market psychology amidst ongoing developments.