U.S. stocks surged on Wednesday as investors considered a major Fed policymaker’s decision to raise interest rates by 0.75% and Chairman Jerome Powell suggested the central bank may slow the pace of its rate-raising cycle. Better-than-expected earnings from tech giants also helped boost sentiment.
The S&P 500 gained 2.9%, while the Dow Jones Industrial Average gained 550 points, or about 1.7%. The tech-heavy Nasdaq Composite rose 4.5%, posting its best one-day performance since March 2020.
The Fed raised its benchmark interest rate by another 75 basis points at the end of its two-day policy-setting meeting on Wednesday.
After Microsoft (MSFT) and Alphabet (GOOG, GOOGL) reported earnings late Tuesday, the Fed announced that all three major stock indexes were upbeat.
Despite reporting fiscal fourth-quarter results that fell short of Wall Street expectations, Microsoft’s shares rose 5%, helped by an upbeat outlook for its cloud business. The company maintained its guidance for solid revenue growth for the new fiscal year despite the headwinds from the war in Ukraine, an unfavorable foreign exchange rate environment and the prolonged shutdown in China due to the coronavirus outbreak on its recent financials.
Shares of Alphabet rose 7% on Wednesday, after a worrisome report from Snap (SNAP) last week sparked concerns about the digital ad market, as investors breathed a sigh of relief from a small increase in ad revenue on Tuesday. above.
The reports are behind more big tech results this week, with data from Meta Platforms (META) due after the market close on Wednesday, while Apple (AAPL) and Amazon (AMZN) report on Thursday.
The U.S. central bank’s move on Wednesday took interest rates to a range of 2.25%-2.5%, or an estimated “neutral” level, and any further rate hikes would “restrict” economic activity.
“As soon as the market thinks the Fed is going to cut expectations, the market starts to strengthen,” Christopher Harvey, head of equity strategy at Wells Fargo Securities, told Yahoo Finance Live on Tuesday. “You’re not going to get it on Wednesday, but I do think there’s a good chance you’re going to be in That happened in September.”
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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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