STORY: The S&P 500 and Nasdaq posted record high closes in a holiday-shortened trading session Wednesday...

as data pointing to a softening economy raised hopes the Federal Reserve could cut interest rates in September.

The Dow finished down slightly, while the S&P 500 gained half a percent and the Nasdaq climbed nearly nine-tenths of a percent.

Both the ADP Employment report and weekly jobless claims data pointed to easing labor market conditions ahead of Friday's closely watched non-farm payrolls report.

Investors boosted bets of a September rate cut to over 70%, according to LSEG's FedWatch.

Notable stock movers included Tesla, which jumped 6.5% Wednesday after surging more than 10% Tuesday when it posted a smaller-than-expected drop in second-quarter vehicle deliveries.

At least five brokers also raised their price targets on the stock which is trading at its highest level since January.

And shares of AI chip darling Nvidia gained more than 4.5%.

Keith Buchanan, senior portfolio manager at GLOBALT Investments, said that with highflying shares of megacap tech companies powering so much of the S&P, guidance from companies like Nvidia will be key going forward.

"The success of the largest 10 names in the S&P 500, as they grow larger and have powered the indices, in a historic fashion, they become victims of their own success. And there's an increased microscope on every facet of the earnings trends and revenue of these companies, and very rightfully so. [FLASH] So there will be a laser-focus on the trends from a guidance standpoint, even more so than this past quarter - how these companies feel about earnings and revenue going through the second half of 2024 and particularly into 2025."

Other stocks on the move included Paramount Global, which rose almost 7% after Shari Redstone's National Amusements reached a preliminary deal to sell its controlling interest in the media giant to David Ellison's Skydance Media.

And shares of First Foundation slumped nearly 24% after the lender, which holds a huge portfolio of multifamily real estate loans, disclosed a $228 million unexpected capital raise.

Markets will be closed Thursday for the July 4th holiday.