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U.S. stock indices opened higher on Thursday on gains from tech -focused megacap companies a day after hawkish comments from the Federal Reserve weighed on the markets.
The top gains in the S&P 500 benchmark were an 18.4% surge in shares of hard-disk maker Seagate Technology followed by a 13.5% jump in digital workflow company ServiceNow Inc. Both companies reported better-than-expected quarterly results.
Netflix Inc jumped 7.0% when billionaire investor William Ackman acquired a new stake in the streaming service company worth more than $ 1 billion.
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Apple, Microsoft and Alphabet earned nearly 2% each, with the iPhone maker set to report results after the markets close.
All 11 major S&P sectors advanced in early trading, with technology and energy posting the sharpest percentage gains.
“We believe the biggest opportunity in the markets right now is in dividend growth stocks with strong balance sheets and cash flows, and can thrive in an environment no matter what the Fed does,” he said. by David Bahnsen, chief investment officer at Bahnsen Group.
The Fed announced on Wednesday a rate hike in March and reaffirmed plans to end bond purchases that month before launching a significant reduction in its asset holdings, with Chair Jerome Powell warning that the problems with inflation and supply are more persistent than previously thought.
Traders priced at nearly five rate increases in December following the announcement, after full pricing for four previously.
The S&P 500 hit a three -month low last week as fears of uncertainty around Fed policy tightening hit growth stocks. Rising geopolitical tensions in Ukraine between Russia and the West have also added to investor concerns.
The S&P 500 index fell in the previous session amid volatile trading, flirting with a correction for its third consecutive session.
The bellwether index needs to close 10% or more from its record highest closing reached in January. 3 to confirm it has entered the correction territory. It ended the last session 9.3% below that level on Wednesday.
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“As the market judges (Fed’s comments) over the next two sessions, they may feel more comfortable knowing that quantitative tightening is some way and that rate increases are already known and priced,” he said. by Thomas Hayes, member manager at Great Hill Capital LLC in New York.
At 9:58 am ET, the Dow Jones Industrial Average was up 482.60 points, or 1.41%, to 34,650.69, the S&P 500 was up 63.50 points, or 1.46%, to 4,413.43, and the Nasdaq Composite was up .152 . %, to 13,712.27.
The latest data showed that the U.S. economy grew 6.9% in the fourth quarter, far short of economists ’expectations of 5.5% growth.
Meanwhile, the fourth-quarter earnings season is in full swing. Analysts expect earnings from S&P 500 companies to grow 24.4% year-over-year, according to Refinitiv, on Wednesday.
Tesla Inc. fell 5.0% after warning that supply chain issues would last throughout 2022, while Intel Corp. fell 7.1% on a poor earnings forecast in the first quarter also due to global supply problems chain.
The issues progressed more than declines by a 3.90-to-1 ratio on the NYSE and a 2.04-to-1 ratio on the Nasdaq.
The S&P index recorded 16 new 52-week highs and three new lows, while the Nasdaq recorded 14 new highs and 84 new lows. (Reporting by Bansari Mayur Kamdar and Devik Jain in Bengaluru; Editing by Shounak Dasgupta and Maju Samuel)