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Stock market news live updates: Stocks surge as Fed hikes rates by 75 basis points

U.S. stocks surged Wednesday as investors mulled a major decision from Federal Reserve policymakers to raise interest rates by 0.75% and remarks from Chair Jerome Powell hinting the central bank may slow the pace of its rate-hiking cycle. Better-than-expected earnings from tech giants also helped lift sentiment.

The S&P 500 jumped 2.6%, while the Dow Jones Industrial Average gained 430 points, or roughly 1.4%. The tech-heavy Nasdaq Composite soared 4.1%.

The Fed on Wednesday issued another 75 basis point increase on its benchmark interest rate at the conclusion of a two-day policy-setting meeting — a move that came in line with consensus expectations. In remarks following the decision, Powell said he did not believe the U.S. economy is currently in a recession but acknowledged recent data reflected some softening.

Gains following the announcement came amid an already upbeat day for all three major indexes, buoyed by rallies in Microsoft (MSFT) and Alphabet (GOOG, GOOGL) after the heavily-weighted tech giants reported earnings late Tuesday.

Shares of Microsoft rose nearly 7% after the company reported a rosy outlook for its cloud business despite unveiling results for the fiscal fourth quarter that missed Wall Street estimates. The company maintained its guidance for solid revenue growth in the new fiscal year despite the impact of headwinds from war in Ukraine, an unfavorable foreign exchange rate environment, and prolonged COVID shutdowns in China on its most recent financials.

Alphabet shares climbed nearly 8% after the Google parent company posted a modest beat on ad revenue, offering some relief to investors Tuesday following a dismal report from Snap (SNAP) last week that raised concerns about the digital advertising market.

The reports serve as curtain raisers for more Big Tech results this week, with figures from Meta Platforms (META) due out after Wednesday’s close, and Apple (AAPL) and Amazon.com (AMZN) on deck to report Thursday.

UKRAINE - 2021/01/10: In this photo illustrative Google, Amazon and Apple logos are seen behind a silhouette of a hand holding a mobile phone. (Photo Illustration by Pavlo Gonchar/SOPA Images/LightRocket via Getty Images)

Google, Amazon and Apple logos are seen behind a silhouette of a hand holding a mobile phone. (Photo Illustration by Pavlo Gonchar/SOPA Images/LightRocket via Getty Images)

The U.S. central bank’s move on Wednesday brings rates to a range of 2.25%-2.5%, or a “neutral” level estimated to be the point at which any further rate increases would be “restrictive” to economic activity.

“The market can begin to firm once it believes the Fed is going to toggle down expectations,” Christopher Harvey, head of equity strategy at Wells Fargo Securities told Yahoo Finance Live on Tuesday (video above). “You’re not going to get that on Wednesday, but I do think you get a pretty good probability of that occurring in September.”

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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