All the indexes were up nominally all day until about 2 pm.  Then the Dow shot up almost 600 points after 2 pm, then came down a bit in the last half hour to close up 436.  The Nasdaq did even better. So it must have been right around 2 pm that the Fed made the announcement of the ¾ point rate hike. Powell’s comments were taken by investors as hope for a slower pace of hikes and was considered calming. That taken in combo with more better than expected Q2 and everyone went on a buying spree.  Megacaps Microsoft and Alphabet also zoomed further adding to hopes that the recent rally might continue.  Volume was much closer to the 4-week average at just under 10.6 billion. 

Wed  July 27, 2022  7:16 PM

Nasdaq has biggest one-day jump since 2020 after Fed rate hike

By Caroline Valetkevitch

DJ: 31,761.54  -228.50       NAS: 11,562.58  -220.09        S&P: 3,921.05  -45.79      7/26

DJ: 32,197.50  +436.50      NAS: 12,032.42  +469.85       S&P: 4,023.61  +102.56   7/27

NEW YORK, July 27 (Reuters) - 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 (MSFT.O), Alphabet Inc (GOOGL.O) and others added to the day's upbeat tone.  The S&P 500 growth index (.IGX) 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 (.SPLRCT) 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. read more  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. read more  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 (.DJI) rose 436.05 points, or 1.37%, to 32,197.59, the S&P 500 (.SPX) gained 102.56 points, or 2.62%, to 4,023.61 and the Nasdaq Composite (.IXIC) added 469.85 points, or 4.06%, to 12,032.42.

Wednesday's hike was widely anticipated by investors.  Microsoft rose 6.7% after it forecast double-digit growth in revenue this fiscal year on demand for cloud computing services. Alphabet jumped 7.7%, a day after it reported better-than-expected sales of Google search ads, easing worries about a slowing ad market. read more  T-Mobile US Inc (TMUS.O) added 5.2% after it raised its subscriber growth forecast for the second time this year and exceeded quarterly profit expectations. read more

Volume on U.S. exchanges was 10.56 billion shares, compared with the 10.88 billion average for the full session over the last 20 trading days.

Advancing issues outnumbered declining ones on the NYSE by a 5.27-to-1 ratio; on Nasdaq, a 3.15-to-1 ratio favored advancers.  The S&P 500 posted one new 52-week high and 30 new lows; the Nasdaq Composite recorded 50 new highs and 107 new lows.