Stocks Rebound Broadly as Oil and Treasury Yields Stabilize, AI Hardware Shares Rally

Stocks staged a broad rebound on Wednesday after rising crude oil prices and Treasury yields pressured equities during the first two sessions of the week. Although both remained elevated, relative stability in oil and interest rates provided some relief and encouraged renewed buying across most areas of the market. The S&P 500 and Nasdaq Composite each gained 0.5%, while the Dow Jones Industrial Average advanced 0.6%.

Smaller companies performed even better, underscoring the breadth of the recovery. The Russell 2000 climbed 1.2%, while the S&P MidCap 400 gained 0.7%, both outperforming the large-cap benchmarks.

WTI crude settled $0.68 higher, or 0.8%, at $90.96 per barrel but remained below its overnight high near $92. The 10-year Treasury yield finished unchanged at 4.80% after reaching 4.82% overnight. Those relatively contained moves contrasted with the sharper increases in oil and yields that pressured equities earlier in the week and helped create a more supportive backdrop for Wednesday’s session.

Participation was widespread. Ten of the 11 S&P 500 sectors finished higher, while the S&P 500 Equal Weight Index gained 0.6%, slightly outperforming its market-cap-weighted counterpart. The strong showing from the Russell 2000 provided additional evidence that buying interest extended well beyond the largest companies.

Cyclical sectors were among the primary beneficiaries. Materials (+1.5%) topped the sector standings, supported by strength in steel producers amid renewed attention to U.S.-Canada trade negotiations. Steel Dynamics (STLD 247.64, +13.55, +5.79%) was a notable outperformer, while other metals-related stocks also participated in the advance.

Financials (+0.8%) joined the rebound, with gains among several of the sector’s largest components contributing to the Dow’s relative strength.

Communication services (+1.3%) was another standout. Charter Communications (CHTR 158.97, +12.78, +8.74%) and Reddit (RDDT 158.11, +13.47, +9.31%) ranked among the day’s stronger S&P 500 performers, while the sector’s mega-cap components also contributed to the advance.

Information technology (+0.3%) finished modestly higher, although performance beneath the surface was sharply divided between semiconductor and AI infrastructure stocks on one side and software companies on the other.

Semiconductors provided support, lifting the PHLX Semiconductor Index 0.5%. NVIDIA (NVDA 224.40, +6.96, +3.20%) posted a solid gain, helping the chip group extend its recovery. Attention now shifts to Broadcom (AVGO 367.24, -2.44, -0.66%), which reports earnings after the closing bell. Investors will be looking for further evidence that strong AI demand can support the company’s ambitious growth expectations.

Dell Technologies (DELL 492.00, +67.00, +15.76%) was one of the session’s biggest technology winners following a better-than-expected earnings report. The company delivered a sizable earnings beat and raised its fiscal 2027 AI-Optimized Servers revenue outlook to $74 billion from $60 billion, reinforcing expectations for continued strength in AI infrastructure spending.

Dell’s results also provided a favorable read-through for Hewlett Packard Enterprise (HPE 51.86, +0.98, +1.94%), which advanced ahead of its own earnings report after Wednesday’s close.

Software stocks moved sharply in the opposite direction, extending what has already been a difficult week for the group. The iShares Expanded Tech-Software Sector ETF dropped 2.6%, leaving software as one of the market’s clearest pockets of weakness despite the broader rebound.

Palo Alto Networks (PANW 328.39, -33.70, -9.31%) fell sharply despite beating fiscal fourth-quarter expectations and issuing an above-consensus fiscal 2027 outlook. The negative reaction appeared to reflect elevated expectations rather than a significant deterioration in the company’s underlying execution.

MongoDB (MDB 375.40, -58.81, -13.54%) also tumbled 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 weakness across software stocks.

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

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

Wednesday’s rebound provided some welcome relief following the market’s weak start to September. Importantly, the recovery was not driven solely by a handful of mega-cap stocks. Ten sectors advanced, the equal-weight S&P 500 slightly outperformed, and small caps led the major benchmarks higher.

The absence of another sharp increase in crude oil or Treasury yields gave investors room to return to cyclical stocks, semiconductors, financials, and other recently pressured areas. Persistent weakness in software remained a significant blemish, but strength across AI hardware, materials, communication services, and smaller companies allowed the broader market to recover a portion of its losses from the first two sessions of the week.

With Broadcom and Hewlett Packard Enterprise reporting after the close, the next test will come quickly. Their results could help determine whether the renewed strength in AI infrastructure and semiconductor-related stocks has enough momentum to offset the continuing deterioration in software shares.

Our FTinvest 11 model portfolio rebounded 0.98% to close at 1,007.04, recovering most of the previous session’s decline and quickly reclaiming the 1,000 level after slipping below it yesterday. The portfolio remains approximately 8.1% below its all-time closing high of 1,096.33, keeping it outside the 10% correction threshold despite the significant pullback from July’s record.

FTinvest 11 is now up approximately +8.49% year-to-date, improving from +7.44% at yesterday’s close. Today’s rebound provides some stabilization following the persistent weakness experienced during the second half of August and the start of September. The swift recovery above 1,000 is encouraging, although FTInvest 11 remains meaningfully below its all-time high as it continues to navigate heightened short-term volatility while maintaining its disciplined, value-driven focus on long-term capital appreciation.