The S&P 500 growth index jumped 3.9% and also registered its biggest one-day percentage gain since April 2020
The Nasdaq jumped more than 4% on Wednesday in its biggest daily percentage gain since April 2020 as the Federal Reserve raised interest rates as expected and comments by Fed Chairman Jerome Powell eased some investor worries about the pace of rate hikes.
Quarterly reports from Microsoft Corp, Alphabet Inc and others added to the day’s upbeat tone.
The S&P 500 growth index jumped 3.9% and also registered its biggest one-day percentage gain since April 2020. Tech and growth stocks, whose valuations rely more heavily on future cash flows, have been among the hardest hit this year.
The S&P 500 closed at its highest level since June 8, with the technology sector giving the index its biggest boost.
The Fed, in a statement following its two-day meeting, raised the benchmark overnight interest rate by three-quarters of a percentage point. The move came on top of a 75 basis points hike last month and smaller moves in May and March, in an effort by the Fed to cool inflation.
Powell’s comments in a news conference after the statement gave some investors hope for a slower pace of rate hikes.
Equity investors have been worried that aggressive hikes by the Fed could tip the economy into recession.
He did not commit to any specific rate hike in the September meeting, said Jim Paulsen, chief investment strategist at The Leuthold Group in Minneapolis.
Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia, said it was ‘a calming statement, coming on the heels of a day where you saw some earnings and revenues that were better than expectations, albeit expectations that were very tempered.’
The Dow Jones Industrial Average rose 436.05 points, or 1.37%, to 32,197.59, the S&P 500 gained 102.56 points, or 2.62%, to 4,023.61 and the Nasdaq Composite added 469.85 points, or 4.06%, to 12,032.42.