Stocks rise, fueled by tech rally, as all major averages touch highest since early June

Stocks rose on Wednesday, fueled by a rally in tech stocks, as all major averages reached their highest point since early June.

The Nasdaq Composite jumped 1.58%, and the S&P 500 advanced 0.59%. Meanwhile, the Dow Jones Industrial Average was up 47 points, or 0.15%, lagging the other two benchmarks and alternating between gains and losses during the session.

All the major averages hit their highest level since early June.

Those moves follow Tuesday's rally as investors, betting that markets may have finally found a bottom, shifted into more risky assets such as tech stocks.

"It kind of speaks to the risk-on environment we continue to be in that started the beginning of this week, and has played through this Tuesday and into Wednesday time frame," said Art Hogan, chief market strategist at B. Riley Financial.

Information technology and consumer discretionary stocks led gains in the S&P 500, with each sector up more than 1% on Wednesday. Meanwhile, more defensive sectors such as health care and utilities lagged the broader market index.

Semiconductor stocks outperformed after the Senate pushed forward a $50 billion bill to bolster chip manufacturing in the U.S. Shares of Advanced Micro Devices jumped 4.1%, Nvidia was up 4.8%, and Qualcomm advanced 2.9%.

Streaming stocks surged on the back of better-than-expected earnings from Netflix, which said it lost 970,000 subscribers in the second quarter, less than the 2 million it had previously projected. The streaming giant's earnings per share also came in above analyst expectations.

Shares of Netflix jumped 7.4%. Disney advanced 3.8%, Paramount climbed nearly 3.8%, and Roku surged 6.9%.

Meanwhile, Bitcoin breached the $24,000 threshold for the first time in more than a month.

Some investors have been encouraged by the recent trading action, believing it is signaling that the bear market has bottomed. NYSE stocks achieved a widely followed "90% up day" on Tuesday with more than 90% of stocks listed on the exchange advancing and accounting for more than 90% of the volume.

Investors pointed to a Bank of America survey that suggested deteriorating sentiment could potentially set up a buying opportunity in the market. Meanwhile, the U.S. dollar, which recently surged to a 20-year high against the euro, softened.

"We view this bullish breadth day as a sign that the summer rebound for U.S. equities can continue," wrote Stephen Suttmeier, technical research strategist for Bank of America, in a note Wednesday.

Still, other market participants were skeptical of the bounce, as they await more earnings and search for more clues into the state of the U.S. economy.

"History says, but does not guarantee, that yesterday was more likely a bear market bounce than the start of a new bull market," said Sam Stovall, chief investment strategist at CFRA Research.

On the economic front, a report from the Mortgage Bankers Association pointed to more pain for U.S. consumers as they deal with higher prices and interest rates. Mortgage demand declined more than 6% last week compared with the prior week, dropping to its lowest level in 22 years.

At the same time, existing home sales in June fell 5.4% from May, according to the National Association of Realtors.

Busy earnings

About 12% of S&P 500 companies have reported earnings so far this quarter. Of those companies, 68% have beaten analyst expectations, according to FactSet. Investors had been awaiting this earnings season for clues on how companies are coping with the worst in 40 years.

Baker Hughes dropped 7% after disappointing second quarter earnings. The oilfield services company reported earnings of 11 cents per share, which is half what analysts were expecting, according to Refinitiv.

Biogen declined more than 6% despite posting a beat in its latest quarterly report. The company warned that its revenue could take a hit from growing generic competition.

Tesla and United Airlines are slated to post their latest quarterly results after the close.

The Dow rallied more than 700 points during Tuesday's session, with the S&P 500 and Nasdaq soaring 2.8% and 3.1%, respectively. The three benchmarks also closed above their respective 50-day moving averages for the first time since April.