The S&P 500 moved higher on Wednesday as weak private payrolls data increased expectations for a December interest rate cut. These gains helped offset pressure from Microsoft, which fell on renewed concerns about AI-related demand.
By 2:50 p.m. ET (19:50 GMT), the Dow Jones Industrial Average was up 467 points, or 1%. The S&P 500 added 0.5%, and the NASDAQ Composite rose 0.3%.
Weak payrolls data support rate-cut expectations
U.S. private payrolls unexpectedly dropped in November, declining by 32,000 compared to a revised gain of 47,000 in October, according to the ADP National Employment Report. Economists had expected an increase of 5,000.
Nela Richardson, Chief Economist at ADP, said hiring has been uneven as businesses navigate cautious consumer spending and economic uncertainty. She noted that the slowdown was broad, with the sharpest decline among small businesses.
The data highlighted ongoing concerns about a cooling labor market, reinforcing expectations that the Federal Reserve could cut rates later this month.
Market pricing shows nearly a 90% chance that the Fed will lower borrowing costs by 0.25 percentage points at its December 9–10 meeting, according to the CME FedWatch tool. Investors believe policymakers may act to support a weakening labor market despite continued signs of sticky inflation.
On Friday, markets will receive the delayed Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred inflation gauge, along with personal income and spending data. These releases may help shape expectations for the timing and scale of future rate cuts.
Microsoft slips on AI concerns; Marvell announces major acquisition
Microsoft (NASDAQ: MSFT) shares declined after The Information reported that the company had reduced sales targets for its AI offerings. Microsoft denied the report, but concerns persisted. The article claimed that expectations for monetizing new AI “agents” have been lowered because multiple divisions missed their sales targets in the prior fiscal year.
Other AI-related stocks also dipped, including NVIDIA Corporation (NASDAQ: NVDA) and Broadcom Inc. (NASDAQ: AVGO), limiting gains in the broader tech sector.
Marvell Technology (NASDAQ: MRVL) was a standout gainer, jumping after confirming a multi-billion-dollar deal to acquire semiconductor startup Celestial AI. The $3.25 billion acquisition strengthens Marvell’s compute capabilities and secures access to Celestial’s photonics technology, which uses light instead of electrical signals to connect AI and memory chips. The company expects meaningful revenue contributions from this deal in the second half of fiscal 2028.
Microchip Technology Inc. (NASDAQ: MCHP) climbed nearly 9% after raising its earnings guidance and posting results that exceeded Wall Street expectations.
Okta Inc. (NASDAQ: OKTA) also gained more than 3% after delivering stronger-than-expected third-quarter results.
Tesla (NASDAQ: TSLA) rose on reports that the Trump administration plans to accelerate development in the robotics industry, a move that could support companies operating in automation.
Crypto rebound boosts risk assets
Risk appetite improved as cryptocurrency markets bounced back. Bitcoin returned to the mid-$90,000 range after sharp declines earlier in the week. The recovery supported crypto-linked equities and helped lift broader market sentiment.
Netflix Inc. (NASDAQ: NFLX) slipped following a Reuters report that the company made an offer for Warner Bros. Discovery.
