The S&P 500 and Nasdaq Composite both closed higher, with notable gains in energy, consumer discretionary, and financial sectors ahead of Fed meeting.
On Tuesday, the major U.S. stock indexes saw a significant increase as concerns over liquidity in the banking sector subsided and investors turned their attention towards the Federal Reserve’s policy meeting, which is expected to conclude with a 25 basis-point hike to its policy rate.
The Dow Jones Industrial Average rose 316.02 points or 0.98%, the S&P 500 gained 51.3 points or 1.30%, and the Nasdaq Composite added 184.57 points or 1.58%.
On the NYSE, advancing issues outnumbered declining ones by a ratio of 3.22-to-1, and on Nasdaq, a 2.73-to-1 ratio favored advancers.
The S&P 500 and Nasdaq Composite both recorded new highs for the day late in the session, with 5 new 52-week highs on the S&P 500 and 48 new highs on the Nasdaq Composite.
Despite the positive price action, the volume on U.S. exchanges was lower than the 20-day average at 11.75 billion shares compared to 12.63 billion.
Overall, Tuesday’s trading session was marked by a strong upward momentum, and investors remained optimistic ahead of the Federal Reserve’s policy announcement on Wednesday.
The Federal Reserve is currently in a two-day monetary policy meeting where members of the Federal Open Markets Committee (FOMC) will review economic projections and likely implement another 25 basis-point increase to the Fed funds target rate in their ongoing fight against inflation.
Market analysts expect the focus to be on Chairman Jerome Powell’s statement regarding the economy and inflation, rather than the rate hike itself, and how he will address concerns about recent banking troubles.
Currently, the market has priced in an 83.4% likelihood of a rate hike and a 16.6% probability that the policy rate will remain unchanged.
On Tuesday, the major U.S. stock indices closed higher with notable gains in the energy, consumer discretionary, and financial sectors. Rising crude prices drove energy stocks to post the biggest percentage gains.
First Republic Bank shares jumped by 29.5% after talks between JPMorgan CEO Jamie Dimon and other big banks about investing in the lender.
Tesla Inc. also saw a 7.8% increase in its stock price after appearing on track to report one of its best quarters in China, based on car registration data.
James Hyerczyk is a U.S. based seasoned technical analyst and educator with over 40 years of experience in market analysis and trading, specializing in chart patterns and price movement. He is the author of two books on technical analysis and has a background in both futures and stock markets.