U.S. equities closed higher on Wednesday, September 2, snapping a three-day losing streak as the benchmark Treasury yield pulled back from its highest level since November 2023. The rally came despite a private payrolls report that badly missed expectations and a manufacturing survey that cooled from July, while an earnings-driven split sent shares of GitLab, MongoDB and PG&E moving sharply in different directions.

Indices Rebound as Treasury Yields Pull Back

The S&P 500 rose 0.46% to close at 7,666.60, the Dow Jones Industrial Average gained 295.07 points, or 0.56%, to 53,061.95, and the Nasdaq Composite added 0.45% to finish at 26,217.83. The Dow's advance was led by gains in Nvidia and Johnson & Johnson, while the small-cap Russell 2000 outperformed with a 0.75% gain. The CBOE Volatility Index dropped 5.88% to 15.38 as risk appetite improved. The rally followed a pullback in the 10-year Treasury yield, which eased to 4.79% after touching an intraday high of 4.818% earlier in the session.

Jobs and Factory Data Point to a Cooling Economy

Private-sector hiring slowed sharply in August, according to ADP, which reported employers added just 38,000 jobs, the weakest monthly total since January and well below the 47,000 forecast by economists. Education and health services led the gains with 45,000 new positions, while manufacturing shed 17,000 jobs and professional and business services fell by 16,000. Separately, the ISM Manufacturing PMI slipped to 54.6% in August from 55.6% in July, missing the 55.2% consensus estimate. The reading still marked an eighth consecutive month of factory-sector expansion, with the production sub-index holding at a solid 58.3, though new orders, backlogs and employment sub-indexes all softened from the prior month.

Software Earnings Diverge Sharply

Corporate results added volatility to individual names. GitLab shares jumped after the company reported second-quarter revenue of $286.3 million, up 21.3% from a year earlier and ahead of estimates, alongside non-GAAP earnings of $0.24 per share that beat consensus by more than 30%. MongoDB moved in the opposite direction, falling sharply even after beating on both lines, with earnings of $1.90 per share against a $1.61 estimate and revenue of $771.8 million versus $732.9 million expected, up from $591.4 million a year earlier. Investors instead focused on valuation, with the stock trading near 63 times forward earnings heading into the report, a multiple some found difficult to reconcile with its current pace of growth.

PG&E Slides on Wildfire Fallout, Oil and Gold Firm

PG&E shares fell 5.19% to close at $13.33 after pairing quarterly results with plans to defer $2 billion of spending planned for 2027 and launch a strategic review of its finances. The move followed the collapse of California's SB 492 wildfire liability bill at the end of the state's legislative session, leaving the utility more exposed to fire-related costs and prompting the review of options to protect its investment-grade credit profile. Elsewhere, West Texas Intermediate crude rose about 0.9% to near $91 a barrel on U.S.-Iran tensions and reports of tanker incidents near the Strait of Hormuz, while gold added 0.5% to roughly $4,418 an ounce as easing Treasury yields renewed demand for the metal.

Daily market analysis by BCM Markets.