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S&P 500 Rallies as Powell Says Fed Could Cool Rate Hikes; Nasdaq Soars 4%

Published 07/27/2022, 02:52 PM
Updated 07/27/2022, 03:44 PM
© Reuters.

By Yasin Ebrahim

Investing.com -- The S&P 500 jumped Wednesday, as Federal Reserve Chairman Jerome Powell signaled that the Fed could slow the pace of rate hikes, while tech rallied after quarterly results from Alphabet and Microsoft weren’t as bad as many had feared.

The S&P 500 rose 2.9%, the Dow Jones Industrial Average gained 1.7%, or 546 points, the Nasdaq was up 4.4%.

Following the Fed's 0.75% rate hike on Wednesday, Powell teed up the idea of another "unusually large" rate hike in September, but said that further tightening could push the Fed to slow the pace of rate hikes to assess the impact on inflation and the economy.

"As the stance of monetary policy tightens further, it likely will become appropriate to slow the pace of increases...while we assess how our cumulative policy adjustments are affecting the economy and inflation," Powell said.

The 2-year Treasury yield, sensitive to Fed rate hikes, slipped sharply following the remarks as investors appeared to be pricing in the prospect of a pause or easing pace of rate hikes.

Tech, meanwhile, added to recent gains following a rally in Alphabet and Microsoft.

Alphabet (NASDAQ:GOOGL) reported earnings and revenue that fell short of estimates, but results were better than feared, driven by strength in its search business, sending its shares more than 8% higher.

“GOOGL's better-than-feared results continued in the face of an uncertain macro with search upside offset by slight YouTube, Cloud & Other revenue softness,” RBC said in a note.

Microsoft (NASDAQ:MSFT) also reported a miss on both the top and bottom lines, driven largely by a stronger dollar and the impact of China lockdowns, Wedbush said, though it added that the tech giant’s growth story remains intact. Its shares were up more than 6%.

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Microsoft’s growth story is “cloud and core Azure growth which was healthy this quarter and appears to have momentum into 2023 despite economic headwinds,” Wedbush added.

Semiconductor stocks were also in favor as Texas Instruments' (NASDAQ:TXN) better-than-expected quarterly results and guidance improved sentiment on chip stocks.

NVIDIA (NASDAQ:NVDA), Monolithic Power Systems (NASDAQ:MPWR) and ON Semiconductor Corporation (NASDAQ:ON) were among the biggest gainers.

In other news, PayPal Inc (NASDAQ:PYPL) jumped more than 12% as activist investor Elliott Management reportedly took a stake amid plans to push the company to speed up its cost-cutting efforts.

Latest comments

OPINION: the FED (seems to be working for the dissolution of the USA), has failed in all its predictions, what has it left and happened? inflation that is somewhere around 15%, the US debt simply cannot be covered, you exceed 25 trillion dollars, so now raises interest rates, a move that brings absolute collapse / dissolution and US citizens will walk the streets without shoes and their bellies will swell from hunger, and at the end of the day they will become immigrants.!!
controlled demolition of the global economy and the USD - it's all deliberate to bring in the Great Reset
Wait fot the next inflation reading to come out that is the next big gorilla in the room right now.
Carlos:  If future economic reports go a certain way, the Fed will take one path, if reports go another way, Fed will take another path.  What's so hard to understand?
First time I know weakness in the economy causes wall street to rally. Shows how much it's disconnected.
That has happened many times in 2022 alone.
that was the big pump, now tomorrow and into next week, watch the big dump!!! Total market manipulation.
“With inflation at a 42 year high, our adjustments to interest rates and broader monetary policy will continue to be accommodative to ensure wealth is preserved in the equities and housing markets. We recognize the inflation burden that the middle class must bear, but frankly, we have our priorities, and therefore would prefer to allow inflation to run hot rather than cause a recession by raising interest rates high enough to mitigate prices. The American working class will just have to figure it out.”
Thing is that won't work anymore.
Fraud and criminal manipulation in living color today.  Another financial knife in the back of America.
Powell will say anything he will cool and make hot also 😆
Stocks rally, but due to inflationwill there be no food for the poor man’s belly
So much for fighting inflation.
What's wrong w/ the headlines?  Message is: rates were raised and more rate hikes will come, though they will not be as much as was expected.
*  though they could be not as much as was expected.
people begging on the streets, retirees going back to the workplace, millennials living in sheds and tiny homes, crazies shooting people every week.. these are not effects/symptoms of inflation or a recession - quoth Powell
What you described ain't new, they've happened at rising rising rates and at decreasing rates.
love this. the market can never go down. even though bets were on .75 hike and apparently, this was already factored in, we still go over 400 points up!!
how much interest per year does the government pay on its debt? They can't really afford higher interest rates on New debt. Fed needs to go slow for all our sakes.
Powell should be in prison for market manipulation and fraud lying and destroying the US Economy.
Cite the laws he broke
LOL, whining gold bug is whining ! Below 1700 pretty soon again !
Cooling rate hikes when families can't feed themselves?
If only Russia wasn't preventing Ukrainian food exports ...
Or only if big corporations would spend less on CEOs and more on their workers?
inflation gets worse, pandemic gets worse, oil price gets shooting up today, etc. Market is misguided today.
"we can cool rate hikes", like in "inflation is transitory"??
Maybe as transitory as Putin is.
fake pump is the best way to make exit position for big players...
fed is joke and markets cheers on weakness.... Oil metals energy rise 3%...on fed scam...
Biggest investment JOKE in the world.  The criminal manipulation has gone overboard.  Welcome to the GREATEST FINANCIAL FRAUD IN HISTORY.
So we are Bad AND miss Estimates, but we're not so bad, It's enough for a Bullish move of More than 4% in NASDAQ 100, interesting...
I agree with you this is a joke. Let's go to Vegas is more serious.
So wey are bad AND miss Estimates, but we're not so bad, It's enought for a bullish move of More than 4% un NASDAQ 100, interesting...
Market manipulation. Powell expertise! Do you remember when he said 0,5 hike in june and july?
How many economic reports ago was that?
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