Wall Street regained Tuesday losses on Wednesday, and a little extra, as investors walked back their bearish reaction to Italy's ongoing political crisis. The S&P 500 and the Dow advanced 1.3% apiece, while the Nasdaq finished with a gain of 0.9%. Smaller companies outperformed, pushing the small-cap Russell 2000 higher by 1.5%.

Wednesday's rebound effort began in Europe, where Italian shares ended a five-session losing streak. Italy's MIB advanced 2.1%, trimming its weekly loss to 2.7%, even though the country's political situation remained much the same with the anti-establishment 5 Star Movement and the right-wing League parties continuing to try to form a governing coalition. Italian debt also rebounded after an auction of 5-yr and 10-yr government bonds was met with strong demand. The yield on the Italian 10-yr bond, which spiked 41 basis points on Tuesday, dropped 20 basis points on Wednesday to 2.90%.

The U.S. bond market, meanwhile, gave back some of the gains registered in Tuesday's flight-to-safety trade, sending yields higher across the curve. The yield on the benchmark 10-yr U.S. Treasury note finished Wednesday higher by seven basis points at 2.84%, while the yield on the 2-yr U.S. Treasury note climbed 10 basis points to 2.42%. Meanwhile, the U.S. dollar dropped 1.0% against the euro to 1.1655 after hitting a nearly 10-month high against the single currency on Tuesday.

On Wall Street, energy shares led a broad-based advance, underpinned by an increase in the price of crude oil. West Texas Intermediate crude futures soared 2.2% to $68.25 per barrel on Wednesday, notching their first daily gain since May 21, following reports that OPEC and Russia will keep production cuts in place until at least the end of the year. The S&P 500's energy sector finished with a solid gain of 3.1%, easily claiming the top spot on Wednesday's leaderboard. The next-best performing group was financials with a gain of 1.9%.

All S&P 500 sectors finished Wednesday in the green, with seven of eleven adding at least 1.0%. The top-weighted technology group lagged though, adding a relatively weak 0.7%, as the market's biggest component by market cap, Apple (AAPL 187.50, -0.40), finished with a loss of 0.2%. Customer-relations software company Salesforce (CRM 129.30, +2.42) rallied though, adding 1.9%, after beating both earnings and revenue estimates for the first quarter. HP (HPQ 22.16, +0.86) also had a good showing, adding 4.0%, after reporting upbeat quarterly revenues.

Elsewhere on the earnings front, retailers were well-represented once again, with Dick's Sporting Goods (DKS 38.35, +7.87), Michael Kors (KORS 60.41, -7.81), and DSW (DSW 24.61, -1.46) reporting their quarterly results. Dick's spiked 25.8%, hitting its best level since July 2017, after reporting better-than-expected earnings and revenues, but Michael Kors and DSW declined 11.5% and 5.6%, respectively, despite also beating on both the top and bottom lines. Retailers did relatively well overall, pushing the SPDR S&P Retail ETF (XRT 47.26, +0.63) higher by 1.4%.

Reviewing Wednesday's big batch of economic data, which included the Fed's Beige Book for April, the ADP Employment Change report for May, the second estimate of first quarter GDP, Advance International Trade in Goods for April, Advance Wholesale Inventories for April, and the weekly MBA Mortgage Applications Index:

• The Federal Reserve released its April Beige Book, which described the economy as expanding moderately. The report acknowledged the presence of higher manufacturing activity, but consumer spending was classified as 'soft.' The Beige Book also noted the presence of higher costs of basic materials.
• The ADP National Employment Report showed an increase of 178,000 in May (Briefing.com consensus 183,000). The April reading was revised to 163,000 from 204,000.
  • The ADP reading is seen as a prelude to the BLS's nonfarm payrolls figure (Briefing.com consensus 190,000), which will be released on Friday.
• The second estimate of first quarter GDP pointed to an expansion of 2.2%, while the Briefing.com consensus expected a reading of 2.3%. The first estimate came in at 2.3%.
  • The key takeaway from the report is that it was a rerun of a bad episode of consumer spending in the first quarter. Therefore, it won't have any market impact since the "new" news today on Q1 GDP is old news.
• The Advance report for International Trade in Goods for April showed a deficit of $68.2 billion (Briefing.com consensus -$70.7 billion), while the March deficit was revised to $68.6 billion (from $68.0 billion).
• The Advance report for Wholesale Inventories for April was unchanged (0.0%), while the March reading was revised to +0.2% (from +0.5%).
• The weekly MBA Mortgage Applications Index decreased 2.9% following last week's decline of 2.6%.

On Thursday, investors will receive Personal Income (Briefing.com consensus +0.3%), Personal Spending (Briefing.com consensus +0.3%), and the PCE Price Index for April (Briefing.com consensus +0.2%), the weekly Initial Claims report (Briefing.com consensus 227K), the Chicago PMI for May (Briefing.com consensus 57.9), and Pending Home Sales for April (Briefing.com consensus +0.7%).

• Nasdaq Composite +8.1% YTD
• Russell 2000 +7.3% YTD
• S&P 500 +1.9% YTD
• Dow Jones Industrial Average -0.2% YTD

Headlines provided by Briefing.com