After a gloomy start to the week, investors on Wednesday returned to their silver linings playbook. Strong earnings and economic data pushed the main indices into the green. The Dow Jones Industrial Average, the S&P 500, and the Nasdaq all closed higher.

Data released on Wednesday showed that job creation, wages and housing are on the rise. Today’s stock gains came in the wake of brutal sell-offs on Monday and Tuesday.

Health stocks led the surge. The sector bounced back after plunging yesterday on news that Amazon (NSDQ: AMZN), Berkshire Hathaway (NYSE: BRK-A), and JPMorgan Chase (NYSE: JPM) would form a health care company for their employees.

A catalyst for today’s rally was Boeing (NYSE: BA). The aerospace giant released operating results before the opening bell. Earnings beat estimates and guidance was robust.

Chicago-based Boeing is a Dow component. As the world’s largest aircraft maker, it’s a bellwether for manufacturing. In addition to passenger planes, Boeing sells fighter jets. These expensive war planes are central to American power. They’re popular with developing nations. Boeing’s bright prospects are fueling market optimism.

Meanwhile, President Trump’s State of the Union Address last night occurred without incident, nor much impact. The story Wednesday was earnings and the economy, not politics.

The bull case for stocks…

Sure, the bull market is getting old. But you’re only as old as you feel.

An ADP report released Wednesday showed that U.S. private sector payrolls rose in January. Companies hired 234,000 additional workers this month, above expectations for 185,000. Service industries led with 212,000 new jobs. Manufacturing added 12,000 and construction 9,000.

Job gains occurred despite harsh weather. It’s the sort of sustained labor strength that Wall Street likes to see.

Separate data on Wednesday showed a rise in labor costs. The national unemployment rate is 4.1%. Employers in a tight job market must compete for workers. That’s a double-edged sword. Wage growth puts more money into the pockets of consumers. But it fuels inflation.

Housing remains hot. The National Association of Realtors said on Wednesday its pending home sales index increased to a reading of 110.1 last month, up 0.5% from November. The number beat expectations of 0.4%. Pending home contracts are a forward indicator of housing sector strength.

This flurry of upbeat news could be too much of a good thing. The economy could overheat. That’s where the Federal Reserve comes in.

The Federal Reserve ended its two-day meeting on Wednesday. The gathering resulted in no change to interest rates. Today marked the end of the Janet Yellen era. Outgoing Fed chair Yellen is in synch with her successor Jerome Powell. They both embrace gradualism.

The central bank plans three rate hikes this year. But some analysts expect the Fed to increase rates at least four times. Those fears were stoked Wednesday, when the Fed said that inflation would likely rise to its 2% target. The inflation warning weighed on the rally. Gains had been higher in the morning, before the Fed’s afternoon announcement.

Rising rates could kill the bull. Data this week will help guide the Fed’s actions.

Thursday: Motor Vehicle Sales, Jobless Claims, PMI Manufacturing Index, Consumer Comfort Index, ISM Manufacturing Index, and Construction Spending.

Friday: Employment Situation, Consumer Sentiment, Factory Orders, and Baker-Hughes Rig Count.

Barring negative surprises in these reports, the stage is set for further gains in equities.

Wednesday Market Wrap

• DJIA: +0.28% or +72.57 points to close at 26,149.46
  
• S&P 500: +0.05% or +1.38 points to close at 2,823.81
  
• Nasdaq: +0.12% or +9.00 points to close at 7,411.48
  

Wednesday’s Big Gainers

• Electronic Arts (NSDQ: EA) +6.96%

Game developer’s guidance beats expectations.

• Boeing (NYSE: BA) +4.94%

Aircraft maker beats on earnings.

• Xerox (NYSE: XRX) +4.80%

Fujifilm (OTC: FUJIY) to take over XRX.

Wednesday’s Big Decliners

• Eastman Kodak (NYSE: KODK) -13.39%

Imaging firm delays crypto coin offering.

• Juniper Networks (NYSE: JNPR) -7.83%

Tech firm’s guidance falls short.

• SunCoke Energy (NYSE: SXC) -6.83%

Analysts bearish on coke producers.

Letters to the Editor

“I hear a lot about driverless cars. What about driverless trucks?” — Ken B.

The development of driverless trucks is a big opportunity. Chipmakers are teaming up with makers of rigs. Prototypes are hitting the road.

The applications for transportation are huge. By 2035, about 15% of trucks sold are expected to be self-driving. Operators would save money. Shipping costs would fall. Safety would improve.

The U.S. Transportation Department plans a $4 billion investment in driverless technology. Trucking will be a focus of this research.

Questions about breakthrough technologies? Send me an email: mailbag@investingdaily.com

John Persinos is managing editor of Personal Finance and chief investment strategist of Breakthrough Tech Profits.