S&P 500 Climbs as Financials, Energy Rack Up Gains Ahead of Fed Decision

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By Yasin Ebrahim

Investing.com – The S&P 500 climbed Tuesday, led by energy and financials, as the Federal Reserve kicked off its two-day meeting.

The S&P 500 rose 0.6%, the Dow Jones Industrial Average gained 0.3%, or 90 points, the Nasdaq added 0.41%.

Energy was up more than 2% despite weakness in oil prices amid ongoing concerns that Covid-19 lockdowns in China are likely to stem energy demand in the world’s second largest economy.

March crude production was still “comparatively high” in China, Commerzbank (ETR:CBKG) said, citing the National Bureau of Statistics. But that is likely to change in April, pointing to the impact on demand from lockdowns in China.  

BP (NYSE:BP) jumped more than 5% after the oil major reported quarterly results that beat on both the top and bottom lines.

Financials, meanwhile, were also involved in the heavy lifting of the broader market, as investor sentiment in bank stocks returned following the recent surge in Treasury yields.

JPMorgan (NYSE:JPM), Bank of America (NYSE:BAC), Citigroup (NYSE:C) were among the top gainers in the sector, with the latter up more than 3%.

“We think that the simple story that rising rates are good for banks is still very much in place, particularly the first 200-300 basis points of a rate hike cycle,” {{Oppenheimer said in a note}}.

Technology stocks, meanwhile, were boosted by a slip in Treasury yields, but investors remain wary of piling into growth corners of the market at a time when the Federal Reserve is preparing to step up the pace of monetary policy tightening.   

The Fed is expected to raise rates by 50 basis points on Wednesday for the first time in more than two decades to combat stubbornly high inflation.

“The sentiment around the tech space right now is so poor and so hinged to rates (Treasury yields) that even when rates come down, tech stocks don't considerably outperform,” David Wagner, portfolio manager at Aptus Capital Advisors told Investing.com in an interview on Tuesday.

Chip stocks gave up gains to trade roughly flat, but are expected to come into added focus after the closing bell as Advanced Micro Devices (NASDAQ:AMD) delivers quarterly results.

On the earnings front, Pfizer (NYSE:PFE) and Expedia (NASDAQ:EXPE) garnered the bulk of the investor attention.

Pfizer was up more than 1% as better-than-expected first-quarter revenue and earnings helped offset softer guidance on the company’s Covid-19 paxlovid.

Expedia slid more than 13% after travel booking company reported mixed quarterly results and expectations that most of the upside from a rebound in travel demand are priced in.

“The company remains well positioned to benefit as developed market travel rebounds, however, we continue to believe both a strong recovery as well as future margin expansion is fairly baked into shares,” RBC said in a note.