U.S. stocks rose on Wednesday as investors weighed a major decision by Federal Reserve policymakers to raise interest rates by 0.75 percent and remarks by Chairman Jerome Powell that hinted the central bank could slow the pace of its rate hike cycle. Better-than-expected earnings from tech giants also helped boost sentiment.
The S&P 500 rose 2.6%, while the Dow Jones Industrial Average gained 430 points, or about 1.4%. The tech-heavy Nasdaq Composite rose 4.1%.
The Fed on Wednesday issued another 75 basis point increase in its benchmark interest rate at the end of a two-day policy-setting meeting, a move that matched consensus expectations. In remarks after the decision, Powell said he did not believe the US economy was currently in recession, but acknowledged that recent data reflected some softening.
The gains after the announcement came amid an already upbeat day for the three major indexes, boosted by rallies in Microsoft ( MSFT ) and Alphabet ( GOOG , GOOGL ) after the heavily weighted tech giants reported gains on Tuesday in the afternoon.
Shares of Microsoft rose nearly 7% after the company reported an upbeat outlook for its cloud business, despite releasing fiscal fourth-quarter results that underwhelmed Wall Street. The company maintained its guidance for solid revenue growth in the new fiscal year despite the impact of headwinds from the war in Ukraine, an unfavorable exchange rate environment and prolonged COVID shutdowns in China in its latest financial results.
Shares of Alphabet rose nearly 8% after Google’s parent company posted a modest increase in ad revenue, providing some relief to investors on Tuesday following a dismal report from Snap ( SNAP ) last week that raised concerns about the digital advertising market.
The reports serve to raise the curtain on more Big Tech results this week, with numbers from Meta Platforms ( META ) due out after the close on Wednesday, and Apple ( AAPL ) and Amazon.com ( AMZN ) on deck to report on Thursday.
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The 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 US central bank’s move on Wednesday takes rates to a range of 2.25% to 2.5%, or a “neutral” level that is expected to be the point at which any further rate hikes it would be “restrictive” for economic activity.
“The market can start to consolidate when it thinks the Fed is going to change 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 it on Wednesday, but I think you have a pretty good chance of it happening in September.”
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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