There was an update on Jul 27th, 2022, 09:38am.
The stock market moved slightly higher on Wednesday morning thanks to a boost from Big Tech stocks, which both rallied despite missing earnings estimates, while investors look ahead to an upcoming rate hike decision from the Federal Reserve this afternoon.
The central bank is expected to raise interest rates.
The Dow Jones Industrial Average rose over 100 points, while the S&P 500 gained 1%, and the tech-laden Nasdaq climbed 1.8%.
The Federal Reserve is expected to hike rates by 75 basis points, similar to its last meeting in June, as investors await the interest rate decision.
Despite quarterly earnings and revenue coming in below expectations, analysts remain optimistic about the long-term growth of both companies.
Out of more than 150 companies in the S&P 500 that have reported so far, 70% have beat analyst expectations.
Despite lackluster earnings results, shares of Boeing rallied slightly, while the likes of Enphase Energy and Chipotle both reported strong results and saw their stock prices rally 10% and 8%, respectively.
Retail stocks, which tanked on Tuesday following a gloomy profit warning from Walmart, rebounded slightly on Wednesday.
Markets are expecting another rate increase from the Fed. At its meeting last month, the central bank hiked rates by the same amount, in an attempt to combat high inflation. There is a risk that high consumer prices could become entrenched for longer if the Fed gets even more aggressive in raising monetary policy. The second-quarter GDP data will be watched by investors. Despite negative growth in the first quarter, analysts still expect GDP to rise, which would mean the US economy avoids a technical recession.
A 75 basis point hike is widely expected and should be a non-event according to Vital Knowledge founder Adam Crisafulli. He predicts that the Fed is close to a dovish pivot and that it won't happen until later this year.
The tighter monetary policy of the Federal Reserve has caused stocks to put up miserable performance numbers this year. If you only invested in the market on days when the Fed hiked rates, you would be looking at a gain of 6.8% in just three days.
The S&P 500 fell over 1% after Walmart issued a profit warning.
Walmart shares plummeted after the company said profit would be slower due to inflation.
The International Monetary Fund has a gloomy outlook for the global economy.
There would be a threat to the U.S. economic recovery.
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