U.S. stocks posted strong gains ahead of a Federal Reserve announcement that is expected to provide more clarity on coming interest-rate increases—the prospect of which has spooked markets this year.
The S&P 500 added 1.6% Wednesday. The broad index fell Tuesday and has declined in five of the past six trading days. The tech-focused Nasdaq Composite Index rose 2.2%, while the Dow Jones Industrial Average gained 1%, or about 343 points.
Stocks have been whipsawed in recent days by expectations that the Fed will embark on a series of rate increases this year to temper heightened inflation. The prospect of a shrinking balance sheet and higher rates has prompted some to sell risky assets, including shares of technology companies that promise future returns, and cryptocurrencies.
Economists expect the Fed to confirm expectations that it will start raising rates in March when it releases its statement at 2 p.m. ET. Traders in interest-rate futures markets are betting that the Fed will increase rates four or five times this year, according to CME Group.
The advance in markets comes after a rough start to the year. All three major indexes were down year-to-date as of Tuesday’s close, with the Nasdaq declining 13%.
Tech stocks lifted markets Wednesday, with the S&P’s tech sector recently up 2.5%.
Microsoft
shares rose 4.3% after the software giant said its earnings continued to grow as its cloud-services business stayed strong. Semiconductors also advanced:
Nvidia
rose 3.9%,
Micron Technology
added 2.8% and AMD gained 1.8%.
Investors are also monitoring rising tensions between Russia and Ukraine that have drawn the focus of NATO allies. Geopolitical turbulence has buoyed oil in recent days, pushing it to the highest levels since 2014.
“Today the focus is going to 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.”
The VIX, a measure of expected volatility that is sometimes dubbed Wall Street’s fear gauge, ticked down 1.09 points to 30.07. The gauge has climbed this week as stock markets fell.
Technology shares led the upward turn in stocks Wednesday.
Photo:
Ted Shaffrey/Associated Press
Shares of
Mattel
gained 9.7% after The Wall Street Journal reported that it won the license to produce toys based on
Walt Disney’s
princess lineup, and from the “Frozen” franchise.
Earnings season continues, with Tesla and
Intel
slated to report after markets close. Tesla shares added 2.3%.
In other stocks, shares of
Texas Instruments
gained 4% after the company reported higher revenue.
AT&T
shares fell 3.2% after the company swung to a profit as it improved its wireless revenue and shed the burden of its customer-losing pay-TV business in 2021.
In bond markets, the yield on the benchmark 10-year Treasury note crept down to 1.783% Wednesday from 1.784% Tuesday. Yields move inversely to prices.
Brent crude, the international oil benchmark, added 2.2% to $89.06 a barrel. It traded at hits highest levels since late 2014, with supply questions helping to push prices higher.
Overseas, the pan-continental Stoxx Europe 600 jumped 2%, with the biggest gains in the travel and leisure sector. Stock indexes in Asia closed mixed. China’s Shanghai Composite and Hong Kong’s Hang Seng added 0.7% and 0.2%, respectively. Japan’s Nikkei 225 and South Korea’s Kospi each declined 0.4%.
Bitcoin’s dollar value rose 3.7% from its 5 p.m. ET level Tuesday to $37,993. The world’s largest cryptocurrency by market value has recently sagged alongside broader markets, shedding nearly half its value from its November peak.
—Hardika Singh contributed to this article.
Write to Caitlin Ostroff at caitlin.ostroff@wsj.com
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