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Stocks rise ahead of key Fed decision, Microsoft and Alphabet pop after earnings

U.S. stocks rose on Wednesday, boosted by strong gains from Google’s parent company Alphabet and Microsoft, as traders awaited the Federal Reserve’s latest interest rate decision, due later in the day. .

The Dow Jones Industrial Average rose 143 points, or 0.5%. The S&P 500 gained 1.4% and the Nasdaq Composite rose 2.5%.

Alphabet shares rose 5% after the tech giant’s quarterly report showed strong revenue from Google’s search business. That said, the company’s overall earnings and revenue were below expectations.

Microsoft also posted earnings and revenue below analysts’ estimates, but reported a 40% increase in revenue growth for Azure and cloud services. Shares jumped 5%.

“Earnings growth estimates continue to fall, even for the tech sector, which generally holds up relatively well during economic downturns,” Sam Stovall, chief investment strategist at CFRA Research, told CNBC. “Pressure from a pullback in consumer spending likely contributed to EPS/sales shortfalls as all measures of consumer confidence deteriorated sharply from peaks around mid-2021.”

Enphase Energy also emerged on the back of its latest results, trading up around 15%. Chipotle also gained 13% after reporting mixed second-quarter results.

There are other major earnings reports to come. On Wednesday, Qualcomm, Ford and Meta Platforms will report late in the day.

So far, more than 150 S&P 500 companies have released results for the second calendar quarter. Of those names, about 70% beat analysts’ expectations, according to FactSet data.

Traders are also awaiting a key announcement from the Federal Reserve. The central bank will announce its latest interest rate decision on Wednesday afternoon. Markets generally expect a three-quarter percentage point increase in the benchmark rate.

Investors are eager to learn more about the path of interest rates going forward as they fear the central bank’s efforts to reduce inflation could push the economy into a recession – which many see as two consecutive quarters of negative GDP readings. However, the National Bureau of Economic Research, the official arbiter of recessions, uses several other factors to determine one. Second-quarter GDP data is due out on Thursday.

“With so many moving parts to consider, we expect markets to remain volatile after the FOMC meeting,” wrote Mark Haefele of UBS Global Wealth Management. “With markets pricing in a 3.3% fed funds rate by year-end, that means after this week’s meeting there could be around 100 basis points of rate hikes in the future. by the end of December. But the pace of increases remains uncertain.”

Stocks rise ahead of key Fed decision, Microsoft and Alphabet pop after earnings

Source link Stocks rise ahead of key Fed decision, Microsoft and Alphabet pop after earnings

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