Stocks rose in morning trading on Wall Street Thursday as markets settled following several days of whiplash moving up and down.
Investors are encouraged to see strong numbers for US economic growth, which showed the largest increase in GDP last year since 1984. Markets are still processing the latest indications from the Federal Reserve a day. Earlier the central bank was increasingly concerned about inflation and plans to raise interest rates and take other measures soon to combat it.
The S&P 500 index was up 1.7% at 10:15 am Eastern. More than 90% of stocks within the benchmark index have made gains and have been in the green for weeks.
The Dow Jones Industrial Average was up 575 points, or 1.7%, to 34,754 and the Nasdaq was up 1.6%.
Technology stocks led in gains because investors were comfortable moving money to market areas with higher risk. Microsoft’s technology heavyweight rose 3.2% and iPhone maker Apple rose 2.5%.
Banks, communications companies and industrial companies have also made solid successes. Utilities and real estate companies, considered less risky, are lagging behind.
Bond yields have fallen. The yield on the 10-year Treasury fell to 1.80% from 1.84%.
The U.S. economy expanded by 5.7% in 2021, the strongest growth of the calendar year since a 7.2% surge in 1984 after the previous recession. It ended the year by growing at an unexpectedly fast 6.9% annual pace from October to December as businesses replenished their inventories, the Commerce Department reported.
The upbeat report comes a day after the Federal Reserve raised some concerns about how quickly it will ease support for markets and the economy. It said it was “expected to be appropriate soon” to raise interest rates, and investors expected the first in a series of rate increases to happen in March. The Fed also said it would cut monthly bond purchases, intended to lower longer -term rates, in March.
The Fed is monitoring the impact of inflation on businesses and consumers and Fed Chair Jerome Powell acknowledged that the pressure is not dropping. That could mean the central bank needs to take a more aggressive approach to raising interest rates and removing the support it has placed for the markets.
Businesses from a wide range of industries have been warning investors for months that supply chain problems and higher raw material costs have damaged operations. Higher prices passed on to consumers could spur spending retreat and hurt economic growth.
Investors closely monitor the latest round of company earnings to gauge how many companies are hurting by inflation and how they expect it to affect them going forward.
The technology sector has been particularly affected by supply chain problems with long -standing computer chip shortages. Semiconductor equipment maker Lam Research fell 3.4% after saying supply chain issues worsened in December. Chipmaker Intel fell 5.9% after giving investors a poor earnings forecast.
The chip shortage continues to be detrimental to the automotive industry. Tesla fell 4.7% after telling investors that the shortfall would prevent the company from launching new models in 2022.
Solid earnings have helped push shares for many other companies higher. ServiceNow rose 12.7% after the software maker that automates the company’s technology operations reported good financial results. Electronic storage maker Seagate Technology rose 19.4% and jeans maker Levi Strauss rose 12% after also reporting encouraging financial results.