Nasdaq ends at 3-month high as PayPal fuels hopes

STORY: U.S. stocks surged higher on Wednesday, with the Nasdaq hitting its highest level since early May and megacaps Apple, Amazon and Meta Platforms all finishing the session with big gains.

The Dow jumped more than a percent and quarter. The S&P 500 gained more than a percent and a half, while the Nasdaq surged more than two and a half percent.

Data out Wednesday showed the U.S. services industry unexpectedly picked up in July and that supply bottlenecks and price pressures eased, supporting the view that the economy was not in recession.

Sam Stovall is chief investment strategist at CFRA Research.

"Well, I think what we're seeing is better-than-expected data certainly in terms of the Institute of Supply Management numbers that came in stronger than expected. So I think because the economy continues to breath on its own, investors - as a result - are breathing a sigh of relief."

A fresh batch of strong results from companies including PayPal and CVS boosted sentiment in a largely upbeat earnings season.

Shares of PayPal closed up more than 9% after the fintech firm raised its annual profit guidance and said activist investor Elliott Management took a more than $2 billion stake in the company.

CVS Health gained more than 6% after the largest U.S. pharmacy chain raised its annual profit forecast after posting strong quarterly results.

Share of Starbucks rose more than 4% after the coffee chain reported upbeat quarterly profits.

And Moderna surged about 16% after the vaccine maker announced a $3 billion share buyback plan and posted better-than-expected quarterly earnings.

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