Traders work on the floor of the New York Stock Exchange (NYSE) the morning after Democrats achieved wins in New York City, New Jersey, and other states on November 5, 2025, in New York City.
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U.S. equities rose on Wednesday as chipmaker Advanced Micro Devices and other names in the artificial intelligence trade rebounded from valuation concerns that plagued the market in the prior day. The Supreme Court’s tough questions about President Donald Trump’s tariffs also raised hopes that some of the duties may be rolled back.
The Dow Jones Industrial Average traded up 305 points, or 0.7%. The S&P 500 gained 0.7%, while the Nasdaq Composite advanced 0.9%.
AMD had opened lower before ultimately turning positive after the company issued margin guidance that met analyst expectations. The company did post third-quarter earnings and revenue that beat analyst expectations. Shares were last higher by 2%.
Alongside AMD, others such as Broadcom and Micron Technology saw gains, reversing course from their losses in the previous session to jump almost 3% and 8%, respectively. Leading AI players Nvidia and Oracle also recovered from Tuesday’s losses to rise Wednesday.
That move comes after Palantir dropped about 8% Tuesday, as investors worried that valuations for the software company — and the broader AI theme — have gotten untenable. After all, Palantir is trading at more than 200 times forward earnings. The stock extended its losses Wednesday, dropping 2%. Super Micro Devices, another AI-related stock, pulled back 8% on disappointing fiscal first-quarter results, and fellow AI play Arista Networks was down 7% following its latest quarterly results as well.
“The breadth of the market is just not there,” said Phil Blancato, chief market strategist at Osaic. “You have these winners and losers in the AI space, and certainly with stretched valuations, I think we have to be very selective on where you’re making your AI bets going forward.”
“That AI trade is simply running out of steam,” he added. “That’s the problem we’re in, and that’s why we’re in this sideways market.”
Equity investors received some encouraging data on the economy Wednesday with better-than-expected ADP payrolls data and a stronger-than-expected ISM services economy reading. However, the strong data did give a boost to yields, something that some investors may not like to see with expectations growing for a third Federal Reserve rate cut in December.
“This morning’s ADP data suggests that, we are still very much in a strong labor market, and I think sometimes we forget that a strong labor market suggests that you’re not in recessionary environment, and you’re certainly not headed towards one,” Blancato said. “This is a very bullish signal for the current state of the U.S. economy, except that valuations are stretched, so we’re in this really odd period of time where without a significant catalyst, I don’t see the market pushing much higher, but I also don’t see a significant correction coming either.”
Investors were paying attention to the Supreme Court hearing arguments Wednesday regarding President Donald Trump’s tariffs. At issue is whether the president had the authority to impose such duties under the International Emergency Economic Powers Act, or IEEPA. The high court’s justices focused their questions on the legality of the sweeping tariffs, with both conservative and liberal members asking Solicitor General D. John Sauer about the Trump administration’s justification for implementing the levies.
Shares of Detroit automakers Ford and General Motors, two tariff bellwethers, popped 3% each as the oral arguments took place. Construction and mining equipment manufacturer Caterpillar similarly grew 3%.
