Stocks rallied higher on Wednesday, as strong earnings reports from two bellwethers helped boost confidence that corporate earnings may fare better despite a possible looming recession. The Dow Jones Industrial Average soared over 500 points, while the S&P 500 and Nasdaq Composite each rose 1.5%.

Here's how the market settled on Wednesday:

S&P 500 Index (SPY  ): +1.49% or +56.78 points to 3,878.40

Dow Jones Industrial Average (DIA  ): +1.60% or +526.74 points to 33,376.48

Nasdaq Composite Index (QQQ  ): +1.54% or +162.26 points to 10,709.37

Driving the positive momentum, Nike (NKE  ) reported better-than-expected second quarter profit and showed a decline in inventories from the previous period. Investors were also encouraged by comments from CEO John Donahoe that the retailer may be past its inventory peak.

Separately, Fedex (FDX  ) rose over 5% after the shipping gigant reported earnings per share that beat estimates and shared its aggressive cost-cutting plans. CEO Raj Subramaniam said the company had identified an additional $1 billion in savings beyond its forecast from September as part of its "ongoing transformation while navigating a weaker demand environment."

On the economic front, better-than-expected consumer confidence data for December also boosted bullish sentiment on Wednesday. The Conference Board's Consumer Confidence Index rose to 108.3, its highest level since April, from November's upwardly revised reading of 101.4.

"Inflation expectations retreated in December to their lowest level since September 2021, with recent declines in gas prices a major impetus. Vacation intentions improved but plans to purchase home and big-ticket appliances cooled further," said Lynn Franco, senior director of economic indicators at The Conference Board, in a statement.

Existing home sales in November fell for a tenth straight month, dropping 7.7% to a seasonally adjusted annual rate of 4.09 million in a weaker-than-expected print, according to the National Association of Realtors. That print was down from a 5.9% decline to 4.43 million units in October.

"In essence, the residential real estate market was frozen in November, resembling the sales activity seen during the COVID-19 economic lockdowns in 2020," said Lawrence Yun, chief economist at NAR, in a statement. "The principal factor was the rapid increase in mortgage rates, which hurt housing affordability and reduced incentives for homeowners to list their homes. Plus, available housing inventory remains near historic lows."

For stocks, Tesla (TLSA  ) is reportedly expected to freeze hiring and issue another round of layoffs next quarter, according to a report from Electrek, citing a source familiar with the matter.

AMC Entertainment (AMC  ) said in an U.S. Securities and Exchange Commission (SEC) filing Wednesday that it is no longer in talks to acquire theaters from Regal parent Cineworld, which filed for Chapter 11 bankruptcy protection earlier this year.

Despite Wednesday's positive momentum, all three major averages are on track to end a 3-year winning streak and may make 2022 their worst year since 2008. Investors have been hoping for a year's end Santa Claus rally -- which typically sees stocks rise in the last five trading day of the year and the first two of the new year.