Stocks rose on Wednesday after the Fed For the expected interest rate increase of 0.75 percentage points To fight inflation, he hinted that he might slow the pace of his hiking campaign at some point.
The Dow Jones Industrial Average jumped 436.05 points, or nearly 1.4%, to 32,197.59. The S&P 500 rose 2.62% to close at 4,023.61. The Nasdaq Composite Index rose 4.06% to 12,032.42. Technology shares led the gains a day after Alphabet and Microsoft reported quarterly results.
Stocks hit session highs in the afternoon as Federal Reserve Chairman Jerome Powell left the door open on the size of the central bank’s rate movement at its next meeting in September, and indicated it would eventually slow the scale of rate hikes. Powell said at a press conference that the Fed could rise 0.75 percentage points again in September, but it will depend on the data.
“With the monetary policy stance tightening, it will likely become appropriate to slow the pace of increases as we assess how our cumulative policy adjustments affect the economy and inflation,” he said.
Investors were also encouraged after Powell indicated that he does not believe the economy is currently in a recession. The second-quarter GDP reading is due on Thursday.
Investors remained concerned that the central bank’s continued efforts to bring down inflation would push the economy into recession, or that we might already be in a recession. Those fears subsided on Wednesday after Powell said he did not believe the United States was in a recession, adding that “there are many economic areas that are doing very well.”
“The reason this provides some comfort to the stock market is because the Fed recognizes that there can be an impact on the growth of the economy based on its policy,” said Garji Chaudhry, iShares Americas head of investment strategy at BlackRock. “They realize there are two sides to this: there is a growth trade-off to fight inflation. This recognition is something we have today that we haven’t heard before.”
Many consider two consecutive quarters of negative GDP readings a recession, but the National Bureau of Economic Research, the official arbiter of recessions, Uses several other factors to determine one. Thursday’s GDP reading is expected to barely show an expansion after Q1 GDP fell 1.6%.
Today’s stocks got off to a big start after getting a boost from technology earnings. Technology stocks added to those gains as the overall market rebounded.
Alphabet shares rose about 7.7% after the tech giant’s quarterly report showed Strong revenue from Google search business. Microsoft gained nearly 6.7% after that Reporting a 40% jump in revenue growth For Azure and Cloud Services. The gains came even after both companies reported lower earnings and revenue than analysts’ estimates.
Shares of Meta Platforms are up nearly 6.6%, ahead of their scheduled earnings after the bell. Amazon advanced more than 5% after being hit by Tuesday’s retail carnage. Apple added 3.4%.
Retailers also rose as inflation concerns eased Wednesday afternoon. Walmart, which led the decline in retail prices in the previous session, rose about 3.8%. Kohl’s, Ross Stores, and Costco added more than 2% each. SPDR S&P Retail ETF offers around 2.6%.
Enphase Energy also stood out on the back of its recent results, ending the day 17.9% higher. Chipotle added 14.7% after it Mixed second quarter earnings statement.
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