On Wednesday, the Nasdaq recorded an increase of more than 4%, which was its biggest percentage gain in a single day since April 2020.
This came in light of the US Federal Reserve’s increasing the interest rate as per expectations and comments of Jerome Powell, the Fed chairman, who eased investors’ concerns about future rate hikes.
The day’s upbeat tone also got a boost from quarterly earnings reports of Alphabet Inc. and Microsoft Corp.
S&P 500 Index
There was also a 3.9% increase in the S&P 500 growth index, which also saw its biggest percentage gain in a single day since April 2020.
Growth and tech stocks have taken the hardest hit this year, as their valuations are influenced mostly because of future cash flows.
The S&P 500 ended the day at its highest level after June 8th and it got its biggest boost from the technology sector.
After the conclusion of its two-day meeting, the Fed announced an increase in the interest rate by three-quarters of a percentage point.
This move came on top of a similar move last month and smaller hikes recorded in March and May, as the Fed is trying to cool the surging inflation.
The comments of the Fed chairman in a news conference after the announcement gave investors hope of a slowdown in the aggressive rate hike.
There have been concerns amongst equity investors that the aggressive tightening by the Fed could drive the economy into recession.
Market analysts said that Powell had not committed to a specific rate hike in the September meeting and the announcement had come on a day when revenues and earnings had turned out to be better than expectations.
There was a 1.37% increase in the Dow Jones Industrial Average, which rose by 436.05 points to reach 32,197.59, while a 2.62% gain in the S&P 500 saw it rise by 102.56 points to reach 4,023.61.
As for the Nasdaq Composite, it recorded gains of 4.06% that took it up by 469.85 points to 12,032.42 points. Investors had widely anticipated the rate hike on Wednesday.
There was a 6.7% rise in Microsoft Corp, after the company forecast growth in revenue by double digits this fiscal year, thanks to the demand for its cloud computing services.
A 7.7% jump was also seen in Alphabet Inc., after its Google search ads sales turned out to be better than expected, thereby easing worries of a slowdown in the ad market.
A 5.2% rise was also recorded in T-Mobile US Inc. after its subscriber growth forecast rose this year for the second time and surpassed profit expectations for the quarter.
US exchanges saw a volume of 10.56 billion shares with the last 20 days having a trading volume of 10.88 billion on average.
There was only one new 52-week high posted by the S&P 500 index, while the number of new lows was 30.
There were 107 new lows on the Nasdaq Composite and 50 new highs.