Explained – Three major reasons why the Dow Jones gained 300 points on Wednesday

Benchmark indices on Wall Street snapped a three-day losing streak on Wednesday, September 2, as dip buyers emerged after a wave of selling pressure due to higher bond yields and crude oil prices.

The Dow Jones ended with gains of 300 points, while the S&P 500 and the Nasdaq Composite ended with gains of 0.5% each. In extended trading, data analytics software maker Snowflake, reported results that beat estimates and also raised its full-year guidance, leading to the stock jumping 22%.

Three major reasons led to a rebound in the US stock markets on Wednesday:

First, bond yields took a breather after relentless selling through the week across global markets. Intraday, the US 10-year bond yields hit a level of 4.818%, the highest since November 2023, before cooling off. However, they still remain elevated at 4.782%.

Second, Nvidia is now a part of the Dow Jones, and the stock saw gains of over 3% on Wednesday after strong results from Dell showed that AI hardware spending is not just restricted to the big players. The company is also close to a deal to acquire Hugging Face, an AI startup, according to reports. Nvidia’s gains contributed to the surge in the Dow.

Third, crude oil prices did not see a rapid surge towards the $100 a barrel mark despite Iran threatening retaliation to the US attacks over the last few days. Brent Crude continues to hover around the $95 a barrel mark after topping levels of $96 earlier in the day on Wednesday.

US Energy Secretary Chris Wright said that oil exports through the Strait of Hormuz crossed 17 million barrels per day on Monday, almost at par with the pre-war levels of 20 million barrels. Wright asserted that Iran is losing its ability to control the Strait and that oil & gas will continue to be transported out of the Arabian Gulf, with, or without Iran. Wright’s claims though, are yet to be confirmed by independent ship traffic tracking agencies.

Chipmaker Broadcom reported its third quarter results after market hours, which were better than expectations. However, the guidance disappointed the street as analysts were expecting the figure to be higher. CEO Hock Tan is confident that AI chip sales will see a sharp jump over the next two years. The stock has seen volatile moves after the results announcement.Beyond the markets, ADP’s private payrolls grew by 38,000 in the month of August, the smallest increase since the start of the year. The July figure was revised to 46,000 as well. August’s number is also below expectations, which stood at 47,000. All eyes are now on the non-farm payrolls data, which will be reported on Friday evening, Indian time.

Later today, Services PMI numbers will be reported on Wall Street, along with results from athleisure company Lululemon and electronic signatures company DocuSign.