The Dow Jones Industrial Average surged after Federal Reserve Chairman Jerome Powell offered insights following the latest steep rate hike. Microsoft and Google parent Alphabet surged on earnings, with Apple and Amazon among names boosted in turn.
Meanwhile, a trio of stocks made bullish moves amid the encouraging action. The Invesco Solar ETF joined Leaderboard after crossing an aggressive entry, while SolarEdge Technologies and T-Mobile both staged breakouts.
Volume picked up late, rising on the Nasdaq and the New York Stock Exchange according to preliminary data.
The yield on the benchmark 10-year Treasury note inched up one basis point to 2.80%. West Texas Intermediate crude oil rose more than 3% to just over $98 per barrel.
Powell Gives This Hint After Big Fed Rate Hike
Fed Chairman Jerome Powell once again acted as a stock market whisperer following the latest meeting of the Federal Open Market Committee.
Following a unanimous vote, the group announced a widely expected 0.75% rate hike. This was the second such hike in a row amid runaway inflation.
The updated Fed statement noted that recent indicators of production and spending "have softened." And while he refused to say whether a further 75-basis-point hike is on the table, Powell also raised the prospect of a gentler path ahead as well.
"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," he said at the post-meeting press conference.
Nevertheless, Oanda senior market analyst Edward Moya said investors would be wise to exercise caution even though traders seem to be thinking another large move on rates will not be justified in September.
"A clear greenlight to buy up risky assets won't happen until we see evidence inflation is coming down," he said in a note to clients. "Inflation risks will remain elevated as energy shortages are likely, supply-chain issues won't ease given a weakening global outlook, and as pandemic-related issues remain troubling."
Nasdaq Surges As Tech Stocks Climb
The Nasdaq was the clear winner out of the major indexes, rocketing 4.1%. The S&P 500 also turned in a meaty gain, jumping 2.6%.
The S&P 500 sectors were all positive. Technology and communication services were the best performers. Utilities turned in the slimmest gains.
Small caps also struck back against the bears, with the Russell 2000 closing up 2.6%.
The Innovator IBD 50 ETF, a bellwether for growth stocks, powered higher. It rose 2.3%.
Dow Jones Today: Microsoft Earnings Boost Index
The Dow Jones Industrial Average built on early gains following Fed Chair Powell's press conference. It surged late to close up 1.4%.
Microsoft stock was the top performer on the Dow Jones today, rising nearly 7%.
This saw MSFT stock smash through the key 50-day moving average, according to MarketSmith analysis.
The stock vaulted despite missing forecasts for its fiscal fourth quarter.
It was boosted by bullish comments from Chief Financial Officer Amy Hood during the conference call.
"We continue to expect double-digit revenue and operating income growth in both constant currency and U.S. dollars," she said. "Revenue growth (in fiscal 2023) will be driven by continued momentum in our commercial business and a focus on share gains across our portfolio."
Google Earnings Drive Amazon, Apple Stock Higher
Google parent Alphabet gave Big Tech stocks a boost following its latest earnings report. It ended the session up 7.7% and retook its 50-day line.
Better-than-expected guidance was the key that acted as a balm for under-pressure technology plays. Resilience in ad revenue was another high point.
"Search continues to be resilient given the large number of advertisers and performance nature of ads," Oppenheimer analyst Jason Helfstein said in a report.
The other FANG stocks were bolstered by the report. Amazon stock burst clear of its short-term moving averages as it closed up 5.4%. Netflix jumped 6%.
Facebook parent Meta Platforms, which is posting earnings late, gained 6.6%. The social media giant remains shy of its 50-day moving average.
Apple stock was another Big Tech play that rallied following the encouraging guidance. The Dow Jones component finished the day just below its 200-day moving average after it rose 3.4%.
Stocks Run After Fed's Powell Hints At Slower Rate Hikes
Outside Dow Jones: These Stocks Test Buy Points
The Invesco Solar ETF crossed a trendline entry of 140, closing the day just below the top of its buy zone.
The bullish move saw TAN stock added to the prestigious IBD Leaderboard list of top stocks.
Fellow solar energy play SolarEdge Technologies broke out of a cup-with-handle base. The ideal buy point here for SEDG stock is 314.62.
Both stocks were boosted due to a strong report from Enphase Energy. Late Tuesday, the firm crushed analyst earnings views and gave upbeat revenue guidance. JPMorgan also named SolarEdge as one of the top picks in the alternative-energy space
But, in addition to individual stock risk, SEDG is getting set to report earnings after the close next Tuesday.
An approach highlighted by Investor's Business Daily is to use options as a strategy to reduce risk around earnings. It's a way to capitalize on the upside potential of a stock's move around earnings, while reducing the downside risk.
T-Mobile stock closed the day in buy range after breaking past a flat-base entry of 139.08.
It made the bullish move despite missing earnings estimates due to one-time items. Revenue also fell short of expectations.
The stock was propelled higher due to the fact that wireless subscriber additions topped analysts' views. Strong earnings and price performance have netted the stock an IBD Composite Rating of 91 out of 99.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more analysis of growth stocks.
