(MENAFN) U.S. equity markets rallied on Wednesday after disappointing employment data from Automatic Data Processing, Inc. (ADP) fueled growing conviction that the Federal Reserve will deliver an interest rate reduction at next week's policy meeting.

The Dow Jones Industrial Average climbed 408.44 points, gaining 0.86 percent to settle at 47,882.9. The S&P 500 advanced 20.35 points, or 0.3 percent, finishing at 6,849.72. The Nasdaq Composite Index edged up 40.42 points, or 0.17 percent, closing at 23,454.09.

Nine out of 11 major S&P 500 sectors posted gains, with energy and financials dominating performance—surging 1.83 percent and 1.27 percent, respectively. Conversely, technology and utilities dragged returns lower, falling 0.42 percent and 0.32 percent, respectively.

Private sector employment in the United States contracted by 32,000 positions in November, ADP reported, starkly missing economist forecasts that had anticipated a 40,000-job expansion for the month.

Despite the disappointing figures, market participants interpreted the weakness as bolstering the case for imminent monetary policy easing. Numerous traders now anticipate the private payroll decline will provide the Fed with additional rationale to reduce borrowing costs during its year-end deliberations.

Market-implied probabilities support this outlook, with the CME FedWatch tool indicating an 89 percent chance of a rate reduction next Wednesday—a dramatic increase from mid-November sentiment.

Anticipation of a lower-rate regime buoyed major banking stocks including Wells Fargo and American Express.

Microsoft weighed on broader indices, tumbling 2.5 percent following a The Information article alleging the company had slashed software sales targets related to artificial intelligence. Shares recovered partially after Microsoft issued a denial of such quota adjustments.

Additional AI-exposed names, including Nvidia, Broadcom, and Micron Technology, also faced selling pressure. Apple declined 0.71 percent.

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