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US STOCKS-Major indexes hold strong gains following Fed rate hike

US STOCKS-Major indexes hold strong gains following Fed rate hike

Reuters · 07/27/2022 14:34
US STOCKS-Major indexes hold strong gains following Fed rate hike

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Microsoft, Alphabet results spark rally in megacap stocks

Fed announces rate hike in unanimous decision

Indexes: Dow up 0.4%, S&P 500 up 1.4%, Nasdaq up 2.6%

Updates to after Fed announcement

By Caroline Valetkevitch

- Major U.S. stock indexes held strong gains on Wednesday after the Federal Reserve raised its benchmark overnight interest rate by three-quarters of a percentage point.

The 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.

Wednesday's hike was expected by many 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."

The Dow Jones Industrial Average .DJI rose 112.37 points, or 0.35%, to 31,873.91; the S&P 500 .SPX gained 54.29 points, or 1.38%, to 3,975.34; and the Nasdaq Composite .IXIC added 300.13 points, or 2.6%, to 11,862.71.

Stocks were already higher before the Fed announcement, with upbeat quarterly reports from Microsoft Corp and Alphabet Inc lifting sentiment about the earnings season.

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

Advancing issues outnumbered declining ones on the NYSE by a 2.65-to-1 ratio; on Nasdaq, a 2.03-to-1 ratio favored advancers.

The S&P 500 posted one 52-week high and 30 lows; the Nasdaq Composite recorded 44 highs and 95 lows.

(Additional reporting by Shreyashi Sanyal, Sruthi Shankar and Aniruddha Ghosh in Bengaluru and Sinead Carew in New York; Editing by Sriraj Kalluvila, Anil D'Silva and Jonathan Oatis)