US equities: Growth stocks raise Wall Street ahead of Fed rate decision


Wall Street’s major indices rose more than 1% on Wednesday, boosted by gains in weakened growth and financial stocks, as investors waited to see how high the Federal Reserve would raise interest rates during its policy meeting to suppress inflation.

Ten of the 11 major S&P sectors made progress in early trading, nine of which were up more than 1%. The pack was consumer discretionary and financials, which rose 1.6% and 1.7% respectively.

The energy sector was the only decliner, with a decline of 0.5%.

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Market heavyweights Apple Inc, Meta Platforms, Alphabet Inc, Microsoft Corp and Inc added between 1.3% and 2.5%.

Traders are almost fully anticipating a 75 basis point increase by the Fed, from 8.2% a week ago, according to CME’s FedWatch Tool. Such a sharp hike would raise the Fed’s short-term key rate to a range of 1.5% and 1.75%.

The central bank will release its statement at 2:00 PM ET (1800 GMT), and a press conference by Fed Chair Jerome Powell is expected at 2:30 PM ET.

“The Fed is going to use 75 basis points and try to talk very aggressively to try to take back control of the narrative, and when it’s all over, investors will breathe a sigh of relief,” said Zach Hill, head of portfolio strategy at Horizon. Investments.

“But the medium-term (market) outlook is that the Fed wants to tighten financial conditions and that means lower stock valuations.”

Concerns about rising inflation, higher borrowing costs and mounting challenges to economic growth have flooded global equities this year.

The benchmark S&P 500 index marked a drop of more than 20% on Monday from its all-time high on Jan. 3, confirming that it was in a bear market, according to a widely used definition.

Data showed that US retail sales unexpectedly fell 0.3% in May as motor vehicle purchases fell amid shortages and record high gasoline prices pulled back spending on other goods.
Economists polled by Reuters had forecast retail sales to rise 0.2% last month.

At 9:44 a.m. ET, the Dow Jones Industrial Average rose 315.84 points or 1.04% to 30,680.67, the S&P 500 rose 48.12 points or 1.29% to 3,783.60 and the Nasdaq Composite rose 179.38 points or 1.66%, at 11,007.73.

Goldman Sachs rose 2.4% to take the largest gains among the major banks.

Nucor Corp. rose 4.6% after forecasting positive profit for the current quarter on strong steel demand.

Boeing Co rose 4.7% after China Southern Airlines Co Ltd conducted test flights of a 737 MAX aircraft for the first time since March this week, a sign that the jet’s return to China could be nearing if demand returns.

The number of emerging issues outperformed the pastures by a 5.79-to-1 ratio on the NYSE and a 3.81-to-1 ratio on the Nasdaq.

The S&P index recorded one new 52-week highs and 30 new lows, while the Nasdaq recorded seven new highs and 77 new lows.

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