Wall Street closed higher on Wednesday, driven by tech and discretionary stocks. Investor mood was upbeat on a report that regulations on artificial intelligence (AI) chips would be lifted. All three benchmark indexes closed the session in the green.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) gained 0.7%, or 284.97 points, to close at 41,113.97. Twenty-four components of the 30-stock index ended in positive territory, while six ended in negative.
The tech-heavy Nasdaq Composite added 48.50 points, or 0.3%, to close at 17,738.16.
The S&P 500 added 24.37 points, or 0.4%, to close at 5,631.28. Eight of the 11 broad sectors of the benchmark index closed in the green. The Technology Select Sector SPDR (XLK), the Consumer Discretionary Select Sector SPDR (XLY) and the Health Care Select Sector SPDR (XLV) advanced 1%, 0.8% and 0.8%, respectively, while the Materials Select Sector SPDR (XLU) declined 0.6%.
The fear-gauge CBOE Volatility Index (VIX) decreased 4.9% to 23.55. A total of 15.43 billion shares were traded on Wednesday, lower than the last 20-session average of 17.55 billion. Advancing issues outnumbered decliners by a 1.56-to-1 ratio on the NYSE.
Trump Administration Rescinds AI Diffusion Rule
Per a report from a major media house, the Trump White House plans to rescind the Biden-era "AI diffusion rule," which was poised to take effect on May 15. The purpose of this rule, if deployed, was to restrict the export of advanced AI chips to various countries like India, Israel and Saudi Arabia by categorizing nations into tiers with varying levels of access.
The regulation had faced criticism for its complexity and potential to hinder American innovation. The Trump administration intends to replace it with a simpler policy that supports U.S. AI leadership while maintaining current export limitations during the transition period.
This was confirmed by the Commerce Department. Per the spokeswoman, officials didn't like the tiered system. However, there isn’t yet a timetable for the new rule. The debate on the best course of action was still underway.
Following this reportage, semiconductor stocks in the market got a big boost, and tech became the biggest winning sector of the day. Consequently, shares of NVIDIA Corporation NVDA and Intel Corporation INTC rose 3.1% and 1.9%, respectively. Both currently carry a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Powell Refuses to Budge Under Trump’s Pressure
At the conclusion of the Fed’s May FOMC meeting on Wednesday, Fed Chair Jerome Powell acknowledged that uncertainty has clouded sentiment in the markets, but the economy itself remains healthy. He said rate cuts are not beyond the realm of possibility, but will only come into the fray if supported by economic data. The Fed cannot make preemptive policy changes until there is more clarity. This comes after weeks of pressure put on the central bank by no less than the President himself to lower rates.
Economic Data
Per a government report, for the week ending May 2, 2025, U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 2 million barrels from the previous week. For the week prior, the number remained unrevised at a decrease of 2.7 million barrels.
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Intel Corporation (INTC): Free Stock Analysis Report NVIDIA Corporation (NVDA): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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