Stocks open higher ahead of Federal Reserve decision on interest rates

Stocks opened Wednesday, with a raft of corporate earnings reports sparking a sharp rebound from losses a day earlier. Traders are prepared for what most expect to be a sharp interest rate hike by the Federal Reserve to cool surging inflation.

The Wall Street’s benchmark S&P 500 index rose 48 points to 3,969, or 1.2%, as of 10:15 Eastern time, while the Dow Jones Industrial Average added 0.4%. The tech-heavy Nasdaq posted the strongest gains, 2.4%.

Shares of Google’s parent company Alphabet are gaining after it reported second-quarter numbers overnight that investors seem to like, and Boeing and Microsoft are also rising on their second-quarter report. Investors will turn their focus later today to an expected decision on interest rates from the Federal Reserve.


How Americans should prepare for another Fed interest rate hike

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Boeing shares rose 3.2% in premarket after the aerospace company said it delivered more planes in the first quarter than it has since the start of the pandemic. Shares of technology heavyweights Microsoft and Google parent Alphabet rose after their latest quarterly reports. Ford and Facebook parent Meta report results after the bell.

The Fed on Wednesday is expected to announce an increase of up to three-quarters of a percentage point in its benchmark interest rate, triple its usual margin. Investors worry such aggressive action by the Fed and other central banks in Europe and Asia to control inflation that is at multi-decade highs might derail global economic growth.

“The main risk at this stage is in fact an inflation ‘overkill’ with monetary tightening too abrupt, unnecessarily pushing up the unemployment rate,” Thomas Costerg of Pictet Wealth Management said in a report. Costerg said most economic indicators and lower commodity prices already point to slower inflation ahead.

The Dow dropped 0.7% Tuesday, while the Nasdaq composite closed 1.9% lower as tech stocks retreated.

In energy markets, benchmark U.S. crude rose 99 cents to $95.97 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the price basis for international oils, added 97 cents to $100.44 per barrel in London.

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