US stocks rallied on Wednesday as investors digested the Federal Reserve’s latest decision to hold interest rates steady and a tech revival sent the Nasdaq surging.
The S&P 500 (^GSPC) rose 1.4% while the tech-heavy Nasdaq Composite (^IXIC) soared more than 2.2%. The Dow Jones Industrial Average (^DJI) rose a more modest 0.6%.
Stocks maintained their gains for the day after the widely anticipated decision from the Fed. The central bank hinted in its policy statement that it is getting closer to cutting rates as it makes progress on lowering inflation.
Chair Jerome Powell’s post-meeting comments will be closely followed for more signs that recent inflation and labour data could support an interest rate cut in September.
Tech stocks were also on the ascent again after taking a battering in recent days. Initial earnings reports from “Magnificent Seven” megacaps had stirred fears the AI boost would prove to be a bust, after falling short of high hopes.
But a swath of positive news is spurring a comeback for chip stocks, with AMD (AMD) shares getting a boost from an AI-driven earnings beat. Nvidia (NVDA) climbed over 11%, regaining ground lost in a steep drop on Tuesday in the halo of the results.
Also on Wednesday, Morgan Stanley noted that the recent 25% drawdown in Nvidia stock presented a “good entry point,” marking a sentiment shift in what’s been an otherwise tough July for the AI leader.
Elsewhere, Dutch chip gear giant ASML’s (ASML, ASML.AS) stock surged about 6% after Reuters reported the US will exempt some foreign allies from new China curbs.
Meanwhile, more earnings are set to roll in, and Meta’s (META) results due later will be scrutinized for signs that the Facebook parent’s AI spending is paying off — the big question for megacaps this season.
In commodities, oil jumped after the killing of Hamas’ political leader in an airstrike stoked geopolitical tensions. Brent crude (BZ=F) futures, the global benchmark, rose just under 3% to top $80 a barrel. US benchmark West Intermediate crude futures (CL=F) climbed to $77 a barrel, a 3% gain.
