US equities rose sharply ahead of an announcement from the Federal Reserve which is expected to provide more clarity on upcoming interest rate hikes – the prospect of this has scared markets this year.
The S&P 500 increased by 1.6% on Wednesday. The broad index fell on Tuesday and has fallen in five of the last six trading days. The technology-focused Nasdaq Composite Index rose 2.2%, while the Dow Jones Industrial Average rose 1%, or around 343 points.
Equities have been whipped in recent days by expectations that the Fed will embark on a series of rate hikes this year to curb rising inflation. The prospect of a shrinking balance sheet and higher prices have led some to sell risky assets, including shares in technology companies that promise future returns, and cryptocurrencies.
Economists expect the Fed to confirm expectations that it will start raising interest rates in March when it publishes its statement at 2 p.m. Traders in fixed income markets are betting that the Fed will raise interest rates four or five times this year, according to CME Group.
The progress in the markets comes after a tough start to the year. All three major indices were down so far this year from the end of Tuesday, with the Nasdaq index falling 1[ads1]3%.
Technology stocks lifted markets on Wednesday, with S & P’s technology sector recently up 2.5%. Microsoft shares rose 4.3% after the software giant said earnings continued to grow as the cloud service business remained strong. Semiconductors also advanced: Nvidia rose 3.9%, Micron Technology rose 2.8% and AMD rose 1.8%.
Investors are also monitoring rising tensions between Russia and Ukraine, which have drawn focus for NATO allies. Geopolitical turbulence has driven oil in recent days, pushing it to its highest levels since 2014.
“Today, the focus will be on the Fed,” said Luca Paolini, chief strategist at Pictet Asset Management. “It’s more about the tone of the press conference. “People may have an expectation that given the market turmoil and the geopolitical tensions, the Fed may tone down its rhetoric.”
VIX, a measure of expected volatility sometimes called Wall Street’s fear meter, ticked down 1.09 points to 30.07. The meter has climbed this week as the stock markets fell.
Shares in Mattel rose 9.7% after The Wall Street Journal reported that they won the license to produce toys based on Walt Disney‘s
princess lineup, and from the “Frozen” series.
The earnings season continues, with Tesla and Intel reporting after the markets close. Tesla shares rose 2.3 percent.
In other stocks, shares of Texas Instruments rose 4% after the company reported higher earnings. AT & T shares fell 3.2% after the company made a profit when it improved its wireless revenues and lost the burden of its customer-losing pay-TV business in 2021.
In the bond markets, the yield on the 10-year government bond shrank to 1.783% on Wednesday from 1.784% on Tuesday. The yield moves in reverse to prices.
Brent oil, the international oil reference, increased by 2.2% to $ 89.06 per barrel. It traded at the highest levels since the end of 2014, with supply issues contributing to pushing prices higher.
Abroad, the pan-continental Stoxx Europe 600 rose 2%, with the largest gains in the travel and leisure sector. Equity indices in Asia closed mixed. China’s Shanghai Composite and Hong Kong’s Hang Seng increased by 0.7% and 0.2% respectively. Japanese Nikkei 225 and South Korea’s Kospi each fell 0.4%.
Bitcoin’s dollar value rose 3.7% from 17.00 ET level on Tuesday to $ 37,993. The world’s largest cryptocurrency by market value has recently coincided with broader markets, throwing almost half of its value from the top in November.
—Hardika Singh contributed to this article.
Write to Caitlin Ostroff at email@example.com
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