U.S. stocks rose early Wednesday as investors geared up for a major decision from Federal Reserve policymakers on interest rates.
All three major indexes pushed forward in early trading, lifted by gains in Microsoft (MSFT) and Alphabet (GOOG, GOOGL) after earnings reports from the tech giants late Tuesday. The S&P 500 advanced 0.8%, while the Dow Jones Industrial Average added 120 points, or roughly 0.4%. The tech-heavy Nasdaq Composite jumped 1.4%.
Shares of Microsoft rose as much as 3.5% at the start of trading, buoyed by a rosy outlook for its cloud business despite unveiling earnings 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 roughly 3% at Wednesday’s open after a modest beat on ad revenue offered 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.
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 Federal Reserve is expected to issue another 75 basis point increase on its benchmark interest rate at the conclusion of its two-day policy-setting meeting Wednesday afternoon. Investors will also tune in to remarks from Federal Reserve Chair Jerome Powell after the U.S. central bank’s policy decision comes out at 2:00 p.m. ET.
If the U.S. central bank follows through on the hike market participants are largely anticipating, the move will bring 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