The tensions at Ukraine-Russian borders to the Fed session have influenced the market and pushed Wall Street forward.
On Wednesday, Wall Street’s main indexes climbed after two turbulent sessions. Microsoft became the star performer, boosting the tech stocks.
It happened before the outcome of a Federal Reserve policy meeting. It is expected to signal the start of an interest rate hike cycle beginning this March. The announcement will be followed by a news conference of Fed Chair Jerome Powell.
His statements will be searched for clues on the magnitude and pace of hikes for the year and most importantly for the strategy of shrinking the central bank’s roughly $9 trillion balance sheet.
Fed funds futures are fully priced in a quarter-point with three more for 2022.
Officials say that one should not expect surprises from the Fed like ending quantitative easing today or signalling a 50-basis point rate hike. Such a meeting in the middle of the earnings season is unique.
It could calm the atmosphere and swing back quickly to the reporting season, which is positive. With technology and consumer discretionary taking charge, all 11 major S&P sectors have advanced.
The Fed’s aggressive action against inflation has scared all rate-sensitive growth stocks.
Russia is using political, economic and military means to exert their pressure over Ukraine and the rest of the world. Its immediate consequence is seen in the fuel prices in Europe. It also influenced the US stock market.
The S&P 500 index flirted with a correction twice this week. In the morning, the Dow Jones Industrial Average was up 355.11 points, the S&P 500 was up 66.12 points and, the Nasdaq Composite was up 291.15 points.
From its record crossing peak on January 3rd, the S&P 500 index is down to nearly 7.7%. At the same time, the tech-heavy Nasdaq has fallen 13.8%.
The investment bank, Goldman Sachs has told their clients that the markets are nearing levels that are considered good entry points for longer-term investors. At the same time, Citibank advised investors to consider buying into market dips.
At the same time, Microsoft became the star performer of the day by gaining 4.3% after estimating current-quarter revenue. It is ahead of market estimates and is driven partly by its cloud business.
Another company that showed good performance is the chipmaker Texas Instruments Inc, which rose by 4.7%. Similarly, the Philadelphia SE semiconductor index jumped by 3.7%.
Analysts say that the earnings momentum remains strong, while the lofty valuations among the US stocks give little scope for disappointments. They also expect the earnings of S&P 500 companies to grow by 24.4% y-o-y.
After the market closed, Tesla Inc added 3.5% ahead of its quarterly results. Mattel jumped 9.3% after the rights of making Disney princess returned to them.
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