Wall St rises on Microsoft and Alphabet earnings as Fed decision looms

  • Microsoft and Alphabet earnings trigger megacap stock rally
  • T-Mobile up after raising subscriber growth forecast
  • Fed policy decision expected at 2 p.m. ET
  • Indices: Dow 0.39%, S&P 1.47%, Nasdaq 2.72%

July 27 (Reuters) – The tech-heavy Nasdaq jumped nearly 3% on Wednesday, leading major Wall Street indexes higher as upbeat quarterly reports from Microsoft and Alphabet bolstered sentiment ahead of a decision key on US interest rates later in the day.

Investors widely expect the U.S. central bank to raise interest rates another 75 basis points later on Wednesday, with focus likely to shift to the depth of signs of an economic slowdown seen among its policymakers. . Read more

Money market traders were even betting on a 1 in 4 chance that the Fed would surprise markets with a larger 1 percentage point increase, according to CME Group’s Fedwatch tool.

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The decision is expected at 2:00 p.m. ET (6:00 p.m. GMT), followed by a press conference by Federal Reserve Chairman Jerome Powell half an hour later, where he is likely to give details of how the bank Central perceives the recent economic environment.

“There’s a balance to be found, if they do too much or too little, it’s going to hurt, so they’re in a tough position,” said Andre Bakhos, managing director of New Vines Capital.

“The key is how it’s said and how they color what’s going on in the world, from the Fed’s perspective.”

Microsoft Corp. (MSFT.O) climbed 5% after forecasting double-digit revenue growth this fiscal year on demand for cloud computing services. Read more

Alphabet Inc. (GOOGL.O) added 7.3% as better-than-expected Google search ad sales eased concerns about a slowing ad market. Read more

The S&P 500 Communication Services Index (.SPLRCL) added 4.3%, up for the first time in five days and led the sector gains. Tech stocks (.SPLRCT) increased by 3%.

The results sparked a rally in high-growth stocks.

Meta Platforms Inc (META.O) added 5.5% ahead of its quarterly report after markets closed, while shares of Apple Inc (AAPL.O) increased by 1.7% and those of Amazon.com Inc (AMZN.O) gained 4.4% ahead of their Thursday results.

Megacap growth stocks have been hammered this year as the Federal Reserve raised interest rates aggressively to tame decades-high inflation. The future cash flows on which the valuation of these companies is based are heavily discounted when interest rates rise.

At 12:37 p.m. ET, the Dow Jones Industrial Average (.DJI) was up 123.91 points, or 0.39%, at 31,885.45, the S&P 500 (.SPX) was up 57.50 points, or 1.47%, at 3,978.55, and the Nasdaq Composite (.IXIC) was up 314.00 points, or 2.72%, at 11,876.57.

PayPal Holdings Inc. (PYPL.O) jumped 11.4% after a report said activist investor Elliott Investment Management was building a stake in the fintech giant. Read more

T-Mobile US Inc (TMUS.O) added 4.1% after raising its subscriber growth forecast for the second time this year and beating quarterly profit expectations. Read more

Advancing issues outnumbered declining issues with a ratio of 2.77 to 1 on the NYSE and 2.11 to 1 on the Nasdaq.

The S&P index recorded a new 52-week high and 30 new lows, while the Nasdaq recorded 39 new highs and 78 new lows.

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Reporting by Shreyashi Sanyal, Sruthi Shankar and Aniruddha Ghosh in Bengaluru; Editing by Sriraj Kalluvila and Anil D’Silva

Our standards: The Thomson Reuters Trust Principles.

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