US stocks advanced Wednesday as investors mulled a major decision from Federal Reserve policymakers to raise interest rates by 0.75%.
Following the decision, all three major indexes sustained gains from earlier in the session, lifted by shares of Microsoft (MSFT) and Alphabet (GOOG, GOOGL) after earnings reports from the tech giants late Tuesday.
The S&P 500 advanced 1.5%, while the Dow Jones Industrial Average added 130 points, or roughly 0.4%. The tech-heavy Nasdaq Composite rallied 2.7%.
The US central on Wednesday issued another 75 basis point increase on its benchmark interest rate at the conclusion of its two-day policy-setting meeting. Investors will tune in to remarks from Federal Reserve Chair Jerome Powell at 2:30 pm ET.
On the earnings front, shares of Microsoft rose as much as 5%, buoyed by a rosy outlook for its cloud business despite unveiling results 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 more than 7% on Wednesday 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.
The US central bank’s move on Wednesday brings 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
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