Stock Market Rises After Fed Raises Rates 0.75%; Microsoft And Google Surge On Earnings

The stock market rallied Wednesday after the the Federal Reserve announced an expected 0.75% rate hike. Stocks also surged on Alphabet‘s (GOOGL) and Microsoft‘s (MSFT) earnings and outlook announcements.




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The Nasdaq composite led major indexes, up 2.5%, while the S&P 500 gained 1.3%. The Dow Jones Industrial Average rose 0.3%. Volume fell on the Nasdaq and the NYSE vs. the same time on Tuesday. The small-cap Russell 2000 index gained 1%.

The Fed ended its two-day meeting by announcing a widely expected 0.75% rate hike. The vote was unanimous. The decision will be followed by a press conference with Fed Chairman Jerome Powell at 2:30 p.m. The Fed is expected to raise interest rates aggressively through the end of the year in an effort to control rising inflation, which hit 9.1% annually in June.

U.S. Stock Market Today Overview

Index Symbol Price Gain/Loss % Change
Dow Jones (0DJIA) 31846.01 +84.47 +0.27
S&P 500 (0S&P5) 3971.15 +50.10 +1.28
Nasdaq (0NDQC ) 11845.51 +282.93 +2.45
Russell 2000 (IWM) 181.03 +1.70 +0.95
IBD 50 (FFTY) 27.31 +0.25 +0.92
Last Update: 2:10 PM ET 7/27/2022

The 10-year U.S. Treasury yield continued to slide Wednesday, falling 3 basis points to 2.77% while the price of crude oil rose to $97.38 a barrel.

Durable Goods Rise, Feeding Stock Market Gains

In other economic news, June durable-goods orders rose 1.9%, beating the consensus forecast for a 0.5% decline. Ex-transportation, orders rose 0.3% vs. views for 0.2%. The core capital goods change was 0.5% vs. the expected 0.2%.

“Durable goods orders continue to show strong gains, with the year-over-year change holding steady in the 10% range,” said Peter Essele, Head of Portfolio Management for Commonwealth Financial Network. “Of particular note in this morning’s release is the fact that the amount of unfilled orders continue to decline. If the current trend continues, inflation should begin to moderate in the coming months as the imbalance of supply and demand swings to the former.”

Google owner Alphabet reported June-quarter earnings and revenue that missed Wall Street targets as YouTube and the cloud-computing business fell short of expectations. Shares rallied more than 6% despite the shortfall.

Software leader Microsoft also missed analyst expectations for its fiscal fourth quarter, blaming unfavorable foreign-exchange rates and weak PC sales. Nonetheless, the company’s upbeat guidance for the current fiscal year boosted the stock, up 4.8%.

Mexican fast-food chain Chipotle (CMG) jumped 15.5%, on pace to beat the stock’s largest percentage increase since March 19, 2020, when it rose 15.25%. Chipotle reported earnings after the close on Tuesday, beating profit estimates but coming up a tad short on sales. Shares rallied into the 200-day moving average and well above the 50-day line.

Spotify, Boeing, Enphase Surge on Earnings

Digital media platform Spotify (SPOT) rallied 15.7% in the first half of Wednesday’s stock market after reporting better-than-expected Q2 monthly active users (MAUs) of 433 million and beating on sales. Shares rose even though the quarterly loss was worse than expected.

E-commerce firm Shopify (SHOP) reported a loss for the June quarter while revenue and gross merchandise volume missed estimates. SHOP stock is trading 6% higher, erasing some of Tuesday’s losses. Yesterday, the CEO confirmed it will cut roughly 1,000 workers, or 10% of its workforce.

Boeing (BA) was up 0.4% after reporting a sales shortfall and a larger-than-expected Q2 loss. The aviation giant beat free-cash-flow expectations by a wide margin.

IBD 50 component Enphase Energy (ENPH) easily beat second-quarter estimates and guided higher for the current quarter as shares surged more than 15%.

Teva Pharmaceuticals (TEVA) announced a $75 million deal to settle opioid claims in West Virginia on Wednesday. Teva stock skyrocketed nearly 20%.

The Innovator IBD 50 ETF (FFTY) climbed 0.9%, with Enphase being the best-performing component.

Follow Michael Molinski on Twitter @IMmolinski

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