Dow Hits 3-Week High as Fresh Data Reinforce Fed Rate Cut Bets

04:55 PM EST, 12/03/2025 (MT Newswires) -- US equity benchmarks rose on Wednesday, with the Dow Jones Industrial Average notching its highest closing level in three weeks as fresh economic data bolstered expectations for a Federal Reserve interest rate cut next week.

The Dow climbed 0.9% to 47,882.9, its strongest finish since Nov. 12. The S&P 500 gained 0.3% to 6,849.7, while the Nasdaq Composite added 0.2% to 23,454.1. Barring technology and utilities, all sectors moved higher, led by energy.

In economic news, private jobs in the US decreased by 32,000 last month, payroll processing firm ADP (ADP) said. The consensus was for a 10,000 increase in a Bloomberg-compiled survey.

The Bureau of Labor Statistics won't publish October employment data that was delayed due a now-ended federal government shutdown. The November jobs report is scheduled for release about a week after the Federal Reserve announces its next monetary policy decision Dec. 10.

The ADP data "might be all that (the Federal Open Market Committee) needs for the more dovish leaning governors to counter some hawkish leaning regional presidents to push through another rate cut," Sal Guatieri, senior economist at BMO Capital Markets, said in a report.

The odds of a 25-basis-point interest rate cut by the FOMC rose to 89% on Wednesday from 88% Tuesday, according to the CME FedWatch tool.

The Institute for Supply Management's services purchasing managers' index ticked higher at 52.6 last month -- the highest reading since February -- from 52.4 in October. The consensus was for a 52 print in a survey compiled by Bloomberg.

"The continued expansion in both the business activity and new orders indexes in November, and the highest backlog of orders index reading since February 2025 are positive signs of an emerging recovery for the services sector," said Steve Miller, chair of the ISM's services business survey committee. "On the downside, tariffs and the government shutdown continue to be noted by survey respondents as impacting both demand and costs."

Separately, S&P Global (SPGI) said that its services PMI gauge dropped to 54.1 in November from October's 54.8. The print marked the lowest reading since June.

"Consumer and business services are also continuing to expand, but report pressure on customer demand from affordability issues in particular," S&P Global Market Intelligence Chief Business Economist Chris Williamson said. "Worryingly, prices charged for services rose at an increased rate in November as firms sought to pass on higher costs, in turn often linked to tariffs."

In contrast, the ISM's measure for prices dropped by 4.6 points to 65.4 in November, the lowest since April.

"Perhaps the most significant development in this report is the decline in the prices index, which could help give the (Fed) confidence that price pressures remain manageable," Vikram Rai, senior economist at TD Economics, said in a report. "It seems competition is a factor as respondents expect to see margins decline to compete for business, which would lead to lower price increases."

US Treasury yields were lower, with the 10-year rate down 3.2 basis points at 4.06% and the two-year rate falling 2.6 basis points to 3.49%.

In company news, Microchip Technology (MCHP) shares jumped 12%, the top gainer on the S&P 500. The company said late Tuesday it expected its fiscal third-quarter net sales and per-share earnings to be at the high end of its previously provided outlook.

Marvell Technology (MRVL) shares jumped 7.9%. The semiconductor solutions provider late Tuesday posted better-than-expected fiscal third-quarter earnings and said it agreed to acquire photonic fabric technology platform Celestial AI in a $3.25 billion deal.

Microsoft (MSFT) fell 2.5%, the worst performer on the Dow. The Information reported on Wednesday that multiple divisions of the tech giant have lowered their sales-growth quotas for certain artificial intelligence products after many of them missed their targets during the fiscal year that ended in June. Microsoft (MSFT) refuted the report, CNBC reported, citing a company spokesperson.

Boeing (BA) must divest "significant" assets of Spirit AeroSystems (SPR) to resolve antitrust concerns tied to the planemaker's proposed acquisition of Spirit, the US Federal Trade Commission said Wednesday. Boeing (BA) shares fell 1.4%, among the steepest declines on the Dow.

Alexandria Real Estate Equities (ARE) was the worst performer on the S&P 500, down 10%, after the company lowered its quarterly dividend by 45%.

West Texas Intermediate crude oil was up 0.8% at $59.10 a barrel in Wednesday late-afternoon trade.

"Oil prices climbed after Russia said talks with US officials in Moscow failed to reach a compromise on a potential Ukraine peace deal that could have eased sanctions on its oil sector," D.A. Davidson said in a morning note.

Gold was up 0.5% at $4,239.70 per troy ounce, while silver rose 0.4% to $58.91 per ounce.

MT Newswires does not provide investment advice. Unauthorized reproduction is strictly prohibited.