Economy News

Tech rebound: US stocks jump higher before Fed decision

Upbeat Microsoft forecast is propelling tech shares higher, as Wall Street awaits the Fed’s guidance on interest rates. 

By Radmilla Suleymanova

US stocks jumped higher on Wednesday following two days of violent swings that left traders and investors in need of a neck brace before the conclusion of the Federal Reserve’s first policy-setting meeting of the year.

At the opening of trading on Wall Street, the Dow Jones Industrial Average vaulted 413.82 points, or 1.21 percent, to 34,711.55. A steep selloff sent the Dow Jones Industrial Average down more than 800 points on Tuesday before the index clawed back most of those losses.

The broader S&P 500 index – a proxy for the health of retirement and college savings accounts – ticked up 74.63 points, or 1.69 percent at the open to 4,430.29. The index also saw wild swings on Monday and Tuesday.

And the tech-heavy Nasdaq Composite Index gained 290.44 points, or 2.13 percent, to be at 13,830.38.

Tech shares are being propelled by Microsoft which shot up 5 percent at the opening bell. On Tuesday after the close of trading, the software and cloud computing giant posted results and sales projections that beat Wall Street estimates.

Intel Corp shares jumped 2.10 percent.

On the downside, AT&T Inc shares fell 0.38 percent despite the telecoms giant beating market estimates for quarterly revenue on strong wireless and streaming demand.

And Mattel Inc shares gained 10.71 percent after it won back the licence to manufacture toys based on Disney princesses. Known for its Barbie and Fisher-Price brands, Mattel lost the Disney licence back in 2016.

And Boeing was down 1.66 percent after the aeroplane maker posted a $4bn loss related to problems with its 787 jet.

Fed push

Interest rate-sensitive tech and growth stocks have come under severe pressure this month as investors fret about the fallout of interest rate hikes by the United States Federal Reserve.

The Fed will announce its policy decision at 2pm ET (19:00 GMT) on Wednesday. Analysts expect the Fed to signal the start of an interest rate hike cycle beginning in March. The Fed signalled in December it was poised to increase interest rates three times this year to cool inflation which is running near 40-year highs.

But investors are still uncertain about how hawkish the US central bank will be and they’ll be paying close attention to Fed chief Jerome Powell’s post-meeting news conference on Wednesday.

Beyond the Fed, Wall Street is monitoring mounting tensions between the US and Russia over the Ukraine crisis.

The fourth-quarter reporting season is also in full swing. Tesla is due to report its earnings after the closing bell on Wednesday. Apple will report at the closing bell on Thursday.


Analysts expect the Fed to signal the start of an interest rate hike cycle beginning in March [File: Andrew Kelly/Reuters]

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