The S&P 500 rallied on Wednesday after Bank of America and Morgan Stanley delivered strong quarterly results that pulled investors back into risk assets, according to data from CNBC.
The S&P 500 surged by 0.4% to 6,671.06, bouncing from early losses as traders brushed off concerns about the ongoing U.S.-China trade fight and a federal government shutdown now in its third week.
Meanwhile, the Nasdaq Composite surged by 0.7% to 22,670.08, while the Dow Jones Industrial Average ended almost flat, slipping 17.15 points, or 0.04%, to 46,253.31 after swinging more than 400 points intraday, according to the data.
The bullish sentiment comes as both Bank of America and Morgan Stanley posted better-than-expected earnings and revenue. Bank of America’s stock surged by 4.4%, while Morgan Stanley’s gained 4.7%, as Cryptopolitan reported. Investors said the results signaled the resilience of U.S. lenders amid rising rates and market volatility.
Sam Stovall, chief investment strategist at CFRA Research, told CNBC, “It appears as if the banks have hit the ball out of the park, exceeding both earnings and revenue expectations.”
Sam added that steady bank performance, along with the widespread expectation that the Federal Reserve will cut rates again for the second time month-end, has brought some well-needed confidence back to the trading floor.
Volatility climbs as trade threats and shutdown tensions deepen
Even with the S&P 500 gaining ground, volatility refused to fade. The Cboe Volatility Index (VIX), often referred to as Wall Street’s fear gauge, ended the session at 20.6, up from 21.6 last Friday, its highest range since late May.
Traders said the rising fear index reflected continued jitters over stalled U.S.-China trade negotiations and the impact of the government shutdown, which has left the release of key economic data from several agencies frozen indefinitely.
The absence of federal updates has left markets flying blind as analysts struggle to measure the economy’s short-term trajectory.
President Donald Trump again took aim at Beijing, threatening to impose a 100% tariff on Chinese imports in response to China’s export restrictions on rare earth minerals.
Later, Trump warned of a ban on Chinese cooking oil imports, saying Beijing’s refusal to purchase U.S. soybeans would have consequences. The president’s remarks briefly sent markets lower before bank earnings pulled stocks back up.
At CNBC’s Invest in America Forum, Treasury Secretary Scott Bessent said the administration wouldn’t adjust its stance to soothe traders. “We won’t negotiate because the stock market is going down,” Bessent said. “We will negotiate because we are doing what is best economically for the U.S.”
Nvidia cools off as analysts raise long-term growth forecasts
While the S&P 500 and banks took the spotlight, tech investors kept a close eye on Nvidia, which erased earlier gains to close 0.1% lower after rising as much as 2.7% intraday. Despite the dip, analysts remained upbeat about Nvidia’s long-term business prospects in artificial intelligence.
HSBC analyst Frank Lee said in a note that he expects Nvidia’s AI chip business to grow beyond traditional Big Tech clients. He mentioned OpenAI’s Stargate projects in the U.S. and abroad, as well as OpenAI’s private deal with Nvidia, estimating those ventures could generate as much as $400 billion in cumulative revenue for the chipmaker.
Frank also pointed to rising demand from CoreWeave and government-funded sovereign AI projects, saying these new buyers could expand Nvidia’s AI GPU total addressable market. He raised his price target for the stock to $320 from $200, though Nvidia stock ended the day below $180 after paring early gains.
“Investors don’t appear ready to send equities back to fresh records at this juncture, as they await more earnings reports and commentary from Washington or Beijing, prior to traveling north,” said Jose Torres, senior economist at Interactive Brokers. “Volatility levels remain elevated, and that signals the potential for abrupt moves in either direction as participants look for any important news that could influence sentiment and risk-taking behavior as a result.”
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