Dow jumps 150 points to a record amid better-than-expected earnings, commodity stocks lead gain

U.S. stocks rebounded on Wednesday as strong earnings results and economic optimism pushed the major averages higher as the trading day went on.

The Dow Jones Industrial average was up 144 points, after trading into the red earlier in the day. The S&P 500 gained 0.5%, also making up earlier losses. The Nasdaq Composite gained 0.6% as chip stocks and other major tech companies rebounded.

General Motors shares climbed 3.4% in early trading after earnings blew past expectations. Activision Blizzard traded higher by 3% after strong results.

Commodity stocks jumped with the Energy Select Sector SPDR and the Materials Select Sector SPDR notching the biggest gains among sectors. Chevron, Dow and Caterpillar were the three biggest gainers in the Dow Jones Industrial Average. ConocoPhillips popped more than 5% thanks in part to an upgrade to buy from Bank of America.

Oil prices rose, with futures for the U.S. benchmark West Texas Intermediate topping $66 per barrel, after data from the American Petroleum Institute showed a sharp drawdown in U.S. oil inventory

The recent surge in commodities prices, including lumber and corn, is increasing inflation expectations and making cyclical stocks more attractive, said Andrew Smith, the chief investment strategist at Delos Capital Advisors in Dallas.

“We’ve seen inflation beneficiaries shoot through the roof … That’s going to lead real rates higher and that’s going to be the source for those cyclical trades to continue to work,” Smith said.

Exercise equipment maker Peloton fell 9% after announcing a recall of its treadmill product due to safety concerns.

Private payrolls rose by 742,000 jobs in April, according to a Wednesday report from ADP. This result was below expectations of 800,000 jobs from economists surveyed by Dow Jones. ADP did revise its March report upward by 48,000 jobs.

On Tuesday, investors exited technology and growth stocks, pushing the Nasdaq Composite down 1.9%. Along with losses in Apple and Tesla, shares of Netflix lost 1.2%, and Microsoft dropped 1.6%. Amazon and Facebook shed 2.2% and 1.3%, respectively. Alphabet fell 1.6%.

There are a number of possible reasons for the downward pressure, including fears about rising inflation, concerns the Federal Reserve may have to taper monetary stimulus earlier than telegraphed, and the potential for tax hikes in the months ahead.

On Wednesday, The IHS Markit U.S. services purchasing managers index came in at 64.7 for April, ahead of the projected reading of 63.3, according to economists surveyed by Dow Jones. The ISM non-manufacturing index came in slightly under expectations at 62.7, however. PMIs are calculated such that readings above 50 represent expansion in an economic sector.