The S&P 500 ends higher after strong bank gains and a rally in chip stocks

The S&P 500 finished higher on Wednesday, with Morgan Stanley and Bank of America rallying after solid quarterly results, as investors continued to focus on the recent increase in trade tensions between China and the US.

Shares of Morgan Stanley rose 4.7% to a record high, while Bank of America rose 4.4% after major lenders beat Wall Street expectations for third-quarter earnings on strong dealmaking.

The S&P 500 bank index rose 1.2% during its first three-day winning streak in more than three weeks. A day earlier, Goldman Sachs and JPMorgan Chase reported solid performance in investment banking and predicted the sector would continue to thrive. This week’s banking results point to strength for major U.S. companies as third-quarter earnings season kicks off. They also provide clues to the health of the economy, while many macroeconomic reports remain in the background due to the government shutdown.

“People are spending money, and it looks like things are going well for consumers. That’s one of the messages from the bank earnings,” said Thomas Martin, senior portfolio manager at GLOBALT in Atlanta. “Employment is not falling like a stone. Both inflation and employment are within ranges that are in principle reasonable.” The Philadelphia Semiconductor Index rose 3% after ASML reported third-quarter orders and operating profit above market expectations, boosted by booming investment in AI. ASML’s American shares rose 2.7%. An investment consortium including BlackRock, Microsoft and Nvidia is set to acquire one of the world’s largest data center operators in a $40 billion deal. Shares of data center companies rose, while Applied Digital soared.

The S&P 500 climbed 0.40% to end the session at 6,671.06 points.

The Nasdaq gained 0.66% to 22,670.08 points, while the Dow Jones Industrial Average fell 0.04% to 46,253.31 points. Seven of the S&P 500’s 11 sector indexes rose 1.5%, led by real estate, followed by a 1.29% gain in utilities. The volume on the American stock exchanges was relatively high, with 21.5 billion shares. traded, compared to an average of 20.4 billion shares over the previous 20 sessions. US Treasury Secretary Scott Bessent told CNBC that Washington did not want to escalate the trade dispute with China, stressing that President Donald Trump is ready to meet Chinese President Xi Jinping in South Korea later this month. On Tuesday, Trump said Washington was considering cutting some trade ties with China, including in cooking oil. The two countries started imposing port fees this week.

Bessent also said he plans to nominate three or four major Federal Reserve candidates to Trump so he can interview them sometime after the U.S. Thanksgiving holiday. Fed Governor Stephen Miran said at a CNBC event that “two more cuts this year sound realistic,” noting that the labor market has clearly weakened. Fed Chairman Jerome Powell also left the door open for interest rate cuts on Tuesday. The Fed said in its latest Beige Book report, prepared through Oct. 6, that some employers reported job cuts due to economic uncertainty, and in some cases due to increased investment in AI. The report also showed that labor supply in the hospitality, agriculture, construction and manufacturing sectors was under pressure due to the Trump administration’s crackdown on illegal immigration. Abbott fell 2.4% after the medical equipment manufacturer’s disappointing quarterly sales.

Progressive Corp fell 5.8% after the insurer reported third-quarter results. Bunge rose by almost 13%, despite the grain trader lowering its profit forecast for 2025 after the merger with Viterra.

The number of declining stocks matched the rising stocks within the S&P 500.

The S&P 500 recorded 34 new highs and 5 new lows; the Nasdaq recorded 154 new highs and 46 new lows.