NEW YORK CITY, RAW – Wall Street jumped on Wednesday, closing sharply higher as megacap growth stocks powered up thanks to a pause in rising interest rates, and upbeat earnings reports also encouraged investors to buy.
The benchmark 10-year US Treasury yield slipped from multi-year highs hit in the previous session, helping steady sentiment across global markets and boosting demand for growth stocks.
Meta Platforms surged more than five per cent, ending four sessions of deep declines that saw it lose almost a third of its value. The biggest boosts to the S&P 500 came from Nvidia , up 2.2 per cent, and Microsoft, up 6.4 per cent.
All 11 S&P 500 sector indexes rose, led by a 2.45 per cent jump in real estate.
“The bond market basically is saying there’s a cap or a limit to how much the Fed is likely to raise rates, and that is very positive for stocks in general, and especially for growth stocks that tend to be valued higher,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York.
Hit by worries about rising interest, the tech-heavy Nasdaq has fallen more than seven per cent so far this year after gaining nearly 21 per cent in 2021. The S&P 500 is down about four per cent year to date.
The Dow Jones Industrial Average rose 0.86 per cent to end at 35,768.06 points, while the S&P 500 gained 1.45 per cent to 4,587.18.
The Nasdaq Composite climbed 2.08 per cent to 14,490.37.
Investors will watch consumer price data on Thursday for clues on the Federal Reserve’s plans to hike interest rates. An unexpectedly strong jobs report last week raised concerns of a more aggressive move by the central bank.
Inflation is forecast at a four-decade high of 7.3 per cent.
The US economy may be nearing a slower pace of inflation, Atlanta Fed President Raphael Bostic said on Wednesday, though he added he is still leaning toward a slightly faster pace of interest rate increases this year.
Of the 316 companies in the S&P 500 that have reported earnings to date, 78 per cent reported above analyst expectations, according to Refinitiv data.
Chipotle Mexican Grill Inc surged 10 per cent after beating profit and sales estimates, while KFC parent Yum Brands Inc rose 2.2 per cent after sales beat estimates.
Enphase Energy Inc jumped 12 per cent on upbeat results, lifting other solar stocks, with SunPower Corp and SolarEdge Technologies Inc up 6.6 per cent and 6.9 per cent, respectively.
CVS Health Corp slipped more than five per cent after its earnings forecast for 2022 fell short of Wall Street expectations.
Advancing issues outnumbered declining ones on the NYSE by a 2.99-to-1 ratio; on Nasdaq, a 2.40-to-1 ratio favoured advancers.
The S&P 500 posted 40 new 52-week highs and no new lows; the Nasdaq Composite recorded 53 new highs and 56 new lows.
Volume on US exchanges was 10.9 billion shares, compared with a 12.3 billion average over the last 20 trading days.