What is the driving force behind the surge in stocks and bonds amidst a decrease in concerns about interest rate hikes? The “Bad News is Good News” motif.

On midday Wednesday, Wall Street continues to make gains as unimpressive economic data strengthens the expectation that the Federal Reserve is nearing the end of its rate-hike cycle. The second estimate for the second-quarter GDP growth was revised downward from 2.4% to 2.1%, and the ADP employment report showed a smaller-than-expected increase in jobs in August. The implied probabilities from the money market for further Fed rate hikes have dropped to 9.5% for the September meeting and 42% for the November meeting. In Wednesday’s trading, the S&P 500 Index rose 0.4%, while the Dow only slightly increased by 0.1%. The technology sector and small-cap stocks performed strongly, with the Nasdaq 100 and Russell 2000 both rising 0.6%. Various major US equity ETFs also experienced gains, such as the SPDR S&P 500 ETF Trust, the SPDR Dow Jones Industrial Average ETF, and the Invesco QQQ Trust. Within the S&P 500’s sectors, the Technology Select Sector SPDR Fund and the Consumer Discretionary Select Sector SPDR Fund saw gains, while the Utilities Select Sector SPDR Fund lagged. Some notable stocks in focus include HP Inc., AMC Entertainment Holdings, Inc., and Insulet Corp. Crude oil and treasury yields dipped slightly, while the dollar fell and gold and silver saw mixed results.