July 27, 2022, 8:47 pm EDT
Rally Boosted By Fed and Technology
It is another surprising rally today: DJIA +1.37%, S&P 500 +2.62%, Nasdaq +4.06.
This rally came as a result of the Fed meeting and earnings from the technology sector. Fed decided to add 0.75% to its benchmark rate so that it reaches the 2.25%-2.5% level. Although it met expectation by the most people, the stock markets still cheered because it did not add 1%.
Another surprise came from the earnings of mega technology companies: GOOGL, MSFT +7%. Furthermore, NVDA +8%, CRM +6%, and TSLA +6% also joined the spike from the technology domain.
These are the primary driving force for the rally today.
Even though it is not easy to justify why the rally is based on missed earnings (GOOGL, MSFT) and rate hikes, the market seems speculative about the upside potential rather than reasonings.
Another observation is that casual restaurant Chipotle (CMG) jump +15% for a promising future. Similarly, Mcdonald’s (MCD) +1% also got to about a 6-month high. It showed that certain restaurants might benefit from the inflation environment. We are interested in both CMG and MCD to track their development.
After hours Meta Platforms (META) announced disappointing earnings so its stock price dropped about -5% in the extended trading hours.
There will be Q2 GDP number and Apple earnings tomorrow so there should be more volatility.
Overall, the stock market continues its rebound effort where it recovered most of the lost ground in June. Most likely, some investors believed the worst or the peak of inflation was made so the future is bright. We are still highly suspicious about the impact of higher rates and a slowdown in the housing and job markets. Thus, let’s keep watching the reactions tomorrow and earnings.