The major domestic equity indexes edged higher on Wednesday, extending a strong start to the quarter as a rally among chip manufacturers stimulated the broader market on growing hopes of a trade deal between Washington and Beijing.

White House economic adviser Larry Kudlow said talks between the United States and China have progressed and both sides hope to get closer to a deal this week.

Much of the benefit went to shares of chip manufacturers, which rely heavily on China for revenue. The Philadelphia Semiconductor index rose as much as 3 percent to a record high. The index ended 2.3 percent higher.

Advanced Micro Devices rose 8.5 percent, the most on the S&P 500, and Intel saw its shares rise 2.0 percent after Nomura Instinet started coverage of both the stocks with “buy” ratings.

Positive sentiment on trade outweighed weak economic data. The Institute for Supply Management’s U.S. services sector PMI for March was below consensus, hitting its lowest level since August 2017.

Earlier, the ADP National Employment Report showed private employers added 129,000 jobs in March, below economists’ estimates.

The S&P 500 came off its highs in afternoon trading after a report from UpGuard, a cybersecurity firm, indicating that millions of Facebook’s user records were inadvertently posted in plain sight on Amazon’s cloud computing servers. Facebook shares turned negative on the report and ended 0.4% lower.

Still, dovish Federal Reserve and trade hopes set the stage for a strong start to the quarter. The S&P 500’s gains put the benchmark stock index just 2 percent below a record high set in September.

Boeing took some stuffing out of the Dow, the result of its shares falling 1.5 percent on concerns that the company might reduce earnings estimates when the company reports delivery numbers next week. Those numbers could reflect the 737-MAX groundings following the Ethiopian crash, Baird said.

Approximately 7.24 billion shares changed hands on the major domestic equity exchanges on Wednesday, as compared to the 7.45 billion share average over the past 20 trading days.

Economic Data Indicates a Slowing of the Economy

Activity in the services sector of the economy hit a 19-month low in March and private payrolls grew less than expected, underscoring a loss of momentum in the economy that supports the Federal Reserve’s move to suspend interest rate hikes this year.

The reports on Wednesday came on the heels of some modestly upbeat data earlier in the week, including retail and motor vehicle sales and manufacturing. The concern is whether there will be a sharp slowdown in economic growth in the first quarter.

The Fed last month ended its three-year campaign to tighten monetary policy, dropping projections for any interest rate increases this year, after lifting borrowing costs four times in 2018.

The Institute for Supply Management (ISM) said its non-manufacturing activity index fell 3.6 percentage points to 56.1, the lowest since August 2017. A reading above 50 indicates expansion in the sector, which accounts for more than two-thirds of U.S. economic activity.

Last month’s sharp slowdown in services industry activity reflected a 7.3 point drop in the production sub-index. Activity was also weighed down by decreases in new and export orders measures. A gauge of service sector employment rose. But many industries continued to believe that their inventories were too high, a potential hurdle for increased production.

The ISM said while businesses in the services sector remained mostly optimistic about overall business conditions and the economy, “they still have underlying concerns about employment resources and capacity constraints.”

It said 16 industries, including utilities, real estate, finance and insurance, healthcare and social assistance, information, and professional, scientific and technical services reported growth last month. The two industries reporting contraction were education services and retail trade.

Businesses in the accommodation and food services industry complained that “labor is tight and in short supply.” Similar complaints were also voiced by businesses in the transportation and public administration sectors.

The economy is losing speed as stimulus from the $1.5 trillion in tax cuts diminishes. It is also facing headwinds from slowing global growth, Washington’s trade war with China and uncertainty over Britain’s exit from the European Union.

Growth estimates for the first-quarter range from as low as a 1.4 percent annualized rate to as high as a 2.1 percent pace. The economy grew at a 2.2 percent pace in the fourth quarter.

The shortage of workers could be curbing job growth. The ADP National Employment Report on Wednesday showed private employers added 129,000 jobs in March, the fewest since September 2017, after creating 197,000 positions in February.

The ADP figures came ahead of the Labor Department’s more comprehensive non-farm payrolls report on Friday, which includes both public- and private-sector employment.

The ADP report, which is jointly developed with Moody’s Analytics, has a poor record predicting the private payrolls component of the government’s employment report. But job growth has slowed from last year’s 223,000 monthly average pace.

Economists polled by Reuters are looking for private payroll employment to have grown by 170,000 jobs in March, up from 25,000 the month before. Total non-farm employment is expected to have increased by 180,000 jobs after a paltry 20,000 gain in February.

According to the ADP report, employment in the goods producing sector fell by 6,000 jobs in March, with manufacturing payrolls shrinking 2,000 and construction shedding 6,000 positions. The services sector added 135,000 jobs last month, concentrated in professional and education and health services.