Stock Market Today: Dow Racks Up Gains After Fed Hikes Rates, Tech Rallies

By Yasin Ebrahim

Investing.com -- The Dow racked up gains on Wednesday, as Federal Reserve Chairman Jerome Powell signaled that the Fed could slow the pace of rate hikes at some point, while tech rallied after quarterly results from Alphabet and Microsoft weren’t as bad as many had feared.

The Dow Jones Industrial Average gained 1.4%, or 436 points, the Nasdaq was up 4.1%, and the S&P 500 rose 2.5%.

Following the Fed's 0.75% rate hike on Wednesday, Powell teed up the idea of another "unusually large" rate hike in September, but said the Fed could slow the pace of rate hikes to assess the impact on inflation and the economy.

"As the stance of monetary policy tightens further, it likely will become appropriate to slow the pace of increases...while we assess how our cumulative policy adjustments are affecting the economy and inflation," Powell said.

The 2-year Treasury yield, sensitive to Fed rate hikes, fell to session lows following the remarks as investors appeared to be pricing in the prospect of a pause or easing pace of rate hikes.

Tech, meanwhile, added to recent gains following a rally in Alphabet and Microsoft.

Alphabet (NASDAQ:GOOGL) reported earnings and revenue that fell short of estimates, but results were better than feared, driven by strength in its search business, sending its shares more than 7% higher.

“GOOGL's better-than-feared results continued in the face of an uncertain macro with search upside offset by slight YouTube, Cloud & Other revenue softness,” RBC said in a note.

Microsoft (NASDAQ:MSFT) also reported a miss on both the top and bottom lines, driven largely by a stronger dollar and the impact of China lockdowns, Wedbush said, though it added that the tech giant’s growth story remains intact. Its shares were up more than 6%.

Microsoft’s growth story is “cloud and core Azure growth which was healthy this quarter and appears to have momentum into 2023 despite economic headwinds,” Wedbush added.

Semiconductor stocks were also in favor as Texas Instruments' (NASDAQ:TXN) better-than-expected quarterly results and guidance improved sentiment on chip stocks.

NVIDIA (NASDAQ:NVDA), Monolithic Power Systems (NASDAQ:MPWR) and ON Semiconductor Corporation (NASDAQ:ON) were among the biggest gainers.

In other news, PayPal Inc (NASDAQ:PYPL) jumped more than 12% as activist investor Elliott Management reportedly took a stake amid plans to push the company to speed up its cost-cutting efforts.