Key Takeaways
- • Tech stocks rallied ahead of the Federal Reserve's Wednesday meeting, with futures for the Nasdaq, already up 2% for the week, rising 0.4% before the open, while S&P 500 futures edged up 0.1% and Dow futures fell 0.3%.
- • Markets widely expect the Fed to hold its benchmark rate steady, even though the Fed hiked the fed funds rate last month for the first time in three years to combat inflation.
- • Higher energy prices from the Middle East conflict are complicating the Fed's position, with U.S. benchmark crude up more than 2% and Brent crude up almost 2% to $111.38 a barrel after an attack on a major Saudi refinery.
- • The 10-year Treasury yield edged up 0.25% to 5.0% early Wednesday, an important inflation indicator for the Fed.
- • SK Hynix jumped 11.4% after reporting record operating profit of 83.3 trillion won ($62.8 billion), while Robinhood fell sharply after quarterly profit missed expectations.
Summary
Tech stocks surged during the week ahead of the Federal Reserve's Wednesday policy meeting, with markets anticipating no change to the benchmark U.S. interest rate, according to the Associated Press. The Nasdaq was already up 2% for the week as of Wednesday's early trading, and its futures rose a further 0.4%. S&P 500 futures edged up 0.1%, while Dow Jones Industrial Average futures fell 144 points, or 0.3%.
The Fed faces a difficult balance. The Fed last month raised the fed funds rate for the first time in three years in an effort to slow inflation, but higher energy prices tied to the conflict in the Middle East are keeping inflationary pressure elevated. U.S. benchmark crude rose more than 2% early Wednesday after an attack on a major Saudi Arabian refinery by Iran-backed Houthi rebels earlier in the week, and Brent crude rose almost 2% to $111.38 a barrel. The yield on the 10-year Treasury, an important inflation indicator for the Fed, edged up 0.25% to 5.0%.
The rally was supported by strong corporate results and access to easy credit, according to the AP. Hyperscalers Microsoft and Alphabet were scheduled to report quarterly earnings after the bell Wednesday, with Amazon and Intel reporting Thursday. Alphabet was up almost 2% early, while Microsoft was essentially flat. Memory chipmaker SK Hynix jumped 11.4% to its highest level in two weeks after reporting a record operating profit of 83.3 trillion won ($62.8 billion) for the last quarter, up nearly sevenfold from a year earlier and above market estimates.
Elsewhere, cryptocurrency platform Robinhood fell sharply after quarterly profit came in below expectations, and Stellantis rose 6% after the automaker maintained its annual guidance despite heavy costs tied to its turnaround. In Europe, Germany's DAX edged up less than 0.1% to 25,598.39, France's CAC 40 declined 0.1% to 7,876.05, and Britain's FTSE 100 fell 0.3% to 10,656.49. South Korea's Kospi surged 6.6% to close at 6,012.44. The Bank of Japan begins a two-day policy meeting Thursday, with its benchmark rate widely expected to remain unchanged. The U.S. dollar slipped to 157.92 Japanese yen from 157.95, and the euro traded at $1.1128.
The Fed faces a difficult balance. The Fed last month raised the fed funds rate for the first time in three years in an effort to slow inflation, but higher energy prices tied to the conflict in the Middle East are keeping inflationary pressure elevated. U.S. benchmark crude rose more than 2% early Wednesday after an attack on a major Saudi Arabian refinery by Iran-backed Houthi rebels earlier in the week, and Brent crude rose almost 2% to $111.38 a barrel. The yield on the 10-year Treasury, an important inflation indicator for the Fed, edged up 0.25% to 5.0%.
The rally was supported by strong corporate results and access to easy credit, according to the AP. Hyperscalers Microsoft and Alphabet were scheduled to report quarterly earnings after the bell Wednesday, with Amazon and Intel reporting Thursday. Alphabet was up almost 2% early, while Microsoft was essentially flat. Memory chipmaker SK Hynix jumped 11.4% to its highest level in two weeks after reporting a record operating profit of 83.3 trillion won ($62.8 billion) for the last quarter, up nearly sevenfold from a year earlier and above market estimates.
Elsewhere, cryptocurrency platform Robinhood fell sharply after quarterly profit came in below expectations, and Stellantis rose 6% after the automaker maintained its annual guidance despite heavy costs tied to its turnaround. In Europe, Germany's DAX edged up less than 0.1% to 25,598.39, France's CAC 40 declined 0.1% to 7,876.05, and Britain's FTSE 100 fell 0.3% to 10,656.49. South Korea's Kospi surged 6.6% to close at 6,012.44. The Bank of Japan begins a two-day policy meeting Thursday, with its benchmark rate widely expected to remain unchanged. The U.S. dollar slipped to 157.92 Japanese yen from 157.95, and the euro traded at $1.1128.
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