July 2, 2022

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S&P 500 in Rally Mode as Tech Finds Strength Ahead of Fed Meeting By Investing.com

© Reuters.

By Yasin Ebrahim

Investing.com — The S&P 500 rallied Tuesday, led by a rebound in tech ahead of the Federal Reserve decision on Wednesday.

The rose 1.4%, the rose 1.2%, or 399 points, the gained 1.8%.

Tech found its footing, climbing more than 2% intraday as the recent weakness in big tech and chip stocks appeared to entice dip-buying action.

Apple (NASDAQ:) and Microsoft (NASDAQ:) led the gains in big tech, with both up more than 2%, while NVDA and AMD also racked up gains.

Also helping tech, Treasury yields took a breather somewhat from their recent melt-up just as the Fed kicked off its two-day meeting.

With the odds of the 25-basis point nearly fully priced in, investor attention will be focused on the Fed’s summary of economic projections to gauge the shift in interest rate expectations for this year.  

“In the Summary of Economic Projections, we expect a pull forward in the median hiking cycle to reveal 5 hikes this year, 4 next year, and 1 in 2024,” Bank of America said in a note.

Commentary on the Fed’s plans to rein in the balance sheet will also garner investor attention.

Sentiment on the broader market was also helped by easing concerns that higher for longer oil prices would dent global growth as fell further below $100 a barrel.

Valero Energy (NYSE:), Baker Hughes (NYSE:), Exxon Mobil (NYSE:) were among the biggest decliners in the energy sector, which was the only sector in the red.

The fall in oil prices wasn’t stemmed by signs that an imminent diplomatic solution to end war appears to be some ways off. 

The Kremlin played down the prospect of an imminent diplomatic solution to the war, even as Ukrainian and Russian negotiators continued talks on Tuesday. In a phone call with Charles Michel, the president of the European Council, Russian President Vladimir Putin said that “Kyiv is not demonstrating a serious attitude towards finding mutually acceptable solutions,” the Kremlin said.

Industrials, meanwhile, were pushed higher by the airline stocks after Southwest, United Airline and Delta reported stronger than expected bookings and signaled a quicker than expected recovery in travel demand.

American Airlines (NASDAQ:), Delta Air Lines (NYSE:), and United Airlines (NASDAQ:) were up more than 7%.

In other news, Starbucks (NASDAQ:) increased more than 4% after it teamed up with Volvo Cars to explore the potential of installing electric vehicle chargers throughout its stores nationwide.

Big Lots (NYSE:) jumped 14% after one of its investors Mill Road, a private equity firm, urged the board to explore a sale in the range of $55 to $70 per share. The stock closed at $31.99 on Monday.

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