Tech stocks lift Nasdaq, S&P 500 as rate-cut expectations tick up

Meanwhile, the leapt 3.5%. Shares of AI leader and rose 2.9% and 7.0%, respectively, both touching record highs.

Consumer staples led sectoral declines, slipping nearly 0.7%.

U.S. Treasury yields slipped to two-month lows after the ADP National Employment report showed private employers increased their headcounts by 152,000 in April, significantly lower than forecast.

Traders now see a nearly 69% chance of a September rate reduction, according to the 's FedWatch tool. Expectations had hovered around 50% last week.

Separately, an Institute of Supply Management survey showed services sector activity stood at 53.8 in May, better than the expectation of 50.8.

With major indexes near all-time highs, investors are juggling worries of a weakening economy with hopes this would lead to an earlier start to the Fed's rate cuts than previously expected.

"It's a confusing time, but now everybody has put (the likelihood of Fed cuts) together. The 10-year Treasury yield is down, and there's a great correlation between that going down and equities coming up," said Kim Forrest, chief investment officer at .

Investors now await the nonfarm payrolls report, due on Friday, for a comprehensive view of the labor market.

"If we get a soft jobs number, that might show the soft landing (for the U.S. economy) is happening," Forrest said.

At 12:20 p.m. ET, the Industrial Average was down 4.89 points, or 0.01%, at 38,706.40, the S&P 500 was up 35.69 points, or 0.67%, at 5,327.03, and the Composite was up 228.20 points, or 1.35%, at 17,085.25.

Hewlett Packard Enterprise topped the benchmark index with an 11.8% rise after forecasting third-quarter revenue above Street expectations, helped by upbeat demand for its AI servers.

Dollar Tree reversed earlier gains, slipping 4.5% after a disappointing quarterly profit forecast. The budget retailer said it would explore options that include a potential sale or spin-off of Family Dollar.

Intel gained 2.0% after buyout firm Apollo Global Management agreed to purchase a 49% equity interest for $11 billion in a joint venture related to the chipmaker's Ireland manufacturing unit.

CrowdStrike Holdings jumped 9.9% after forecasting second-quarter revenue above estimates when markets closed on Tuesday, helped by strong demand for its cybersecurity offerings.

Advancing issues outnumbered decliners by a 1.92-to-1 ratio on the NYSE, and by a 1.66-to-1 ratio on the Nasdaq.

The S&P index recorded 17 new 52-week highs and eight new lows, while the Nasdaq recorded 48 new highs and 95 new lows.