US stocks traded slightly higher on Wednesday as investors weighed a surprisingly soft private payrolls report against growing doubts about near-term AI spending. The Dow led the major indexes, rising 0.4%, while the S&P 500 posted a modest 0.1% gain. The Nasdaq spent most of the session under pressure before trimming losses, as tech struggled to shake fresh anxiety around slowing AI monetization.
The mixed tone followed Tuesday’s across-the-board gains and comes just days before the Federal Reserve’s December meeting. With private-sector hiring unexpectedly contracting, traders ramped up bets that policymakers will cut rates next week—an expectation that has already set the tone for early December trading. Meanwhile, Bitcoin attempted a rebound after a deep, weeks-long slide, briefly touching a two-week high before paring gains.
Market Movers:
- American Eagle Outfitters (AEO) – Shares jumped after the retailer posted stronger-than-expected results, including an 8.5% sales jump and a 29% profit surge driven by Aerie. The company also sharply raised its Q4 income forecast as holiday traffic and merchandising trends outperformed expectations.
- Genius Sports (GENI) – The stock rallied as management laid out 2028 financial targets at Investor Day, highlighting a path toward significant revenue growth and improved margins. Long-term contracts, scalable infrastructure, and expanding sports data monetization added to investor optimism.
- Microchip Technology (MCHP) – Shares climbed after the company said it now expects third-quarter revenue and earnings at the high end of prior guidance. Bookings strengthened through November, with a sequential revenue increase that topped earlier expectations for a decline.
- Marvell Technology (MRVL) – The semiconductor firm rose after delivering upbeat results and confirming its multibillion-dollar acquisition of Celestial AI. Management signaled accelerating demand across AI data centers and expects strong revenue growth through the end of the fiscal year.
- Pure Storage (PSTG) – Shares plunged despite solid results and a raised full-year outlook, as investors reacted negatively to Q4 guidance that came in roughly in line. The sell-off reflected concerns about valuation and the pace of revenue acceleration.
- Acadia Healthcare (ACHC) – The stock sank after the company sharply cut its full-year earnings guidance due to soaring liability-related costs. Management cited higher claim frequency, increased reserves, and less favorable reinsurance terms as major drivers of the downgrade.
- Microsoft (MSFT) – Shares slipped after a report indicated the company is cutting AI software sales quotas amid slower-than-expected enterprise spending. The news reignited concerns that AI adoption may lag ambitious forecasts across the broader tech ecosystem.
- Okta (OKTA) – The identity-software company pulled back even after beating expectations and raising its outlook. Investors appeared cautious about slowing customer spending trends and subscription backlog dynamics.
Weak Jobs Data Fuels Rate Cut Expectations
The ADP report showed that private employers unexpectedly shed 32,000 jobs in November, signaling a more pronounced cooling in the labor market. Small businesses saw the steepest declines, while manufacturing and professional services also contracted. The data helped reinforce market expectations for a December interest-rate cut, with odds climbing toward 90% based on traders’ positioning.
While the report signals a loss of momentum in hiring, it also provides the kind of economic softness Fed officials have pointed to as a precondition for easing policy. With the central bank in its pre-meeting blackout period, incoming data now plays an outsized role in shaping rate expectations.
Tech Stocks on Edge as AI Monetization Concerns Reappear
Microsoft’s quota reduction for AI-related sales opened a new round of skepticism across the sector. The report suggested companies are hesitant to embrace costlier AI add-ons, pulling the air out of AI-linked enthusiasm that dominated markets earlier this year. The ripple effect hit semiconductors first, with Nvidia, Broadcom, TSMC, and Micron all trading lower.
Analysts across major outlets noted that while long-term demand for AI compute remains intact, the near-term monetization picture remains choppier than the market anticipated. That left tech stocks vulnerable to downside pressure even as broader markets stabilized.
Bitcoin Attempts a Recovery After Sharp Slide
Bitcoin climbed back above $93,000 early Wednesday before easing, marking a tentative recovery from its multiweek slump that drove the token below $83,000. Analysts across multiple sources cited shifting global rate expectations, renewed volatility in Japan’s currency markets, and a reset in crypto-linked equities as drivers of recent turbulence. Crypto-related stocks, which were hammered earlier in the week, also steadied as sentiment improved slightly—but analysts warn that volatility will likely continue until macro headwinds stabilize.
Looking Ahead
Markets now turn to the next round of inflation and services-sector data, which could shape the final days before the Fed’s December meeting. With expectations for a rate cut already high, even small deviations in labor or price signals could move markets. Investors are also watching how tech continues to digest concerns around AI monetization and whether Bitcoin can establish a firmer footing after its steep pullback. Seasonal tailwinds typically strengthen into mid-December, but with 2025 repeatedly breaking historical patterns, traders remain cautious heading into the final stretch of the year.
