Wall St ends sharply higher after Fed rate hike, Powell comments

2022-07-27T20:12:06Z

U.S. stocks rallied on Wednesday, led by Nasdaq after the Federal Reserve raised its benchmark overnight interest rate by three-quarters of a percentage point and comments by Fed Chairman Jerome Powell reassured investors.

The news added to gains from upbeat quarterly reports from Microsoft Corp and Alphabet Inc that lifted sentiment about the earnings season.

Powell said in a news conference following the Fed announcement that he did not believe the U.S. economy is currently in a recession but that it is softening. read more

He also said the lack of clear visibility into the future of the economy means the U.S. central bank can provide reliable guidance about where its policy is headed only on a “meeting-by-meeting” basis.

“The willingness of Powell to let data guide them going forward was something that pleased the market. He didn’t automatically say we needed another rate hike,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.

“It was a calming statement coming on the heels of a day where you saw some earnings and revenues that were better than expectations, albeit expectations that were very tempered.”

The Fed action comes on top of a 75 basis points hike last month and smaller moves in May and March, in an effort by the Fed to cool inflation. read more

According to preliminary data, the S&P 500 (.SPX) gained 102.27 points, or 2.58%, to end at 4,023.32 points, while the Nasdaq Composite (.IXIC) gained 465.28 points, or 4.02%, to 12,027.86. The Dow Jones Industrial Average (.DJI) rose 432.05 points, or 1.37%, to 32,196.00.

Wednesday’s hike was widely anticipated by investors.

“This was widely expected and encouraging that it was a unanimous decision,” said Jack Ablin, chief investment officer and founding partner at Cresset Capital. “It was well telegraphed and properly balanced against expectations.”

Microsoft (MSFT.O) forecast double-digit growth in revenue this fiscal year on demand for cloud computing services. Alphabet (GOOGL.O) reported better-than-expected sales of Google search ads, easing worries about a slowing ad market. read more

Related Galleries:

Federal Reserve Board Chairman Jerome Powell attends a news conference following a two-day meeting of the Federal Open Market Committee (FOMC) in Washington, U.S., July 27, 2022. REUTERS/Elizabeth Frantz
A trader works on the floor of the New York Stock Exchange (NYSE) as a screen shows Federal Reserve Board Chairman Jerome Powell during a news conference following a Fed rate announcement, in New York City, U.S., July 27, 2022. REUTERS/Brendan McDermid
A screen displays the Fed rate announcement as a trader works on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., July 27, 2022. REUTERS/Brendan McDermid
Traders work on the floor of the New York Stock Exchange (NYSE) as Federal Reserve Board Chairman Jerome Powell holds a news conference following a Fed rate announcement, in New York City, U.S., July 27, 2022. REUTERS/Brendan McDermid
A Wall Street sign outside the New York Stock Exchange in New York City, New York, U.S., October 2, 2020. REUTERS/Carlo Allegri
Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., July 26, 2022. REUTERS/Brendan McDermid

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