Tech Stocks Stall, Small Caps Surge As Regional Banks Rally, Airlines Rocket: What's Driving Markets Wednesday?

Small-cap stocks outperformed large caps in Wednesday's session, with the Russell 2000 Index surging to test July 2024 highs on the back of expectations for interest rate cuts and a strong rally in regional banks.

Financial stocks continued their upward momentum, buoyed by strong earnings reports. Morgan Stanley MS significantly beat expectations, propelling its stock up by 8% to new all-time highs.

Regional banks, as tracked by the SPDR S&P Regional Banking ETF KRE, rallied 2.1%, hitting levels last seen in early March 2023, prior to the fallout of Silicon Valley Bank.

Airlines also soared, with United Airlines Holdings Inc. UAL posting an 11% rally. The surge lifted the entire industry, as tracked by the U.S. Global Jets ETF JETS, which reached its highest level since July 2023.

The tech sector lagged, weighed down by weak performance in semiconductors. The industry was still reeling from ASML Holding N.V. ASML’s earnings shock on Tuesday, after the company slashed its 2025 revenue outlook, triggering a broad selloff in chipmakers.

Both the Nasdaq 100 and semiconductor stocks remained flat on Wednesday.

In the currency market, the U.S. Dollar Index was poised to log its 12th positive day in the last 13 sessions. Treasury yields edged lower. Oil prices saw a slight decline of 0.6%, with West Texas Intermediate (WTI) crude falling below $70 per barrel.

Precious metals offered positive signals, with gold set to close its fifth consecutive day of gains, while silver rose 0.8%.

In the cryptocurrency space, Bitcoin BTC/USD advanced 1%, reaching $68,000 — its highest level since late July 2024.

Major Indices	Price	1-day % change
Russell 2000	2,289.65	1.8%
Dow Jones	42,981.53	0.6%
S&P 500	5,830.29	0.3%
Nasdaq 100	20,131.29	-0.1%

According to Benzinga Pro data:

• The SPDR S&P 500 ETF Trust SPY rose 0.2% to $580.82.
• The SPDR Dow Jones Industrial Average DIA inched 0.6% higher to $429.93.
• The tech-heavy Invesco QQQ Trust Series QQQ fell 0.2% to $489.94.
• The iShares Russell 2000 ETF IWM rallied 1.8% to $226.77.
• The Utilities Select Sector SPDR Fund XLU outperformed, up 1.4%. The Communication Services Select Sector SPDR Fund XLC lagged, down 0.3%.

Wednesday’s Stock Movers

• Interactive Brokers Group Inc. IBKR fell over 3% after missing earnings estimate.
• Other stocks reactive to company earnings included United Airlines Holdings Inc. UAL, up 11.5%, J.B. Hunt Transport Services Inc. JBHT, up 3.5%, Abbott Laboratories ABT, up 1.7%, Morgan Stanley MS, up 7.6%, U.S. Bancorp USB, up 4.7% and Citizens Financial Group Inc. CFG.
• ASML Holding N.V. fell over 5% after dropping 17% on Tuesday in reaction to dismal revenue outlook.
• Companies set to report their earnings after the close include CSX Corp. CSX, Kinder Morgan Inc. KMI, Discover Financial Services DFS, Equifax Inc. EFX, Steel Dynamics Inc. STLD and Alcoa Corp. AA.

Read Next:

• Mortgage Demand Sees Sharpest Weekly Drop Since April 2020 As Rates Climb Above 6.5%

Photo via Shutterstock.