Dow industrials surge more than 400 points with investors focused on Fed’s first interest-rate hike in 4 years

US stocks climbed on Wednesday, extending the previous session’s rally, as traders awaited a monetary-policy decision from the US Federal Reserve.

Investors also watched Ukraine-Russia developments, as Ukrainian President Volodymyr Zelensky delivered a historic address to the US Congress, calling for support from America to defend itself against attacks from Moscow.

What’s happening
  • The Dow Jones Industrial Average DJIA,
    + 1.06%
    rose 430 points, or 1.3%, to 33,974.

  • The S&P 500 SPX,
    + 1.60%
    gained 1.4%, or 62 points, to around 4,325.

  • The Nasdaq Composite Index COMP,
    + 2.67%
    rose 1.8%, or 234 points, to 13,183.

On Tuesday, the Dow rose 599 points, or 1.82%, to 33544, the S&P 500 increased 89 points, or 2.14%, to 4262, and the Nasdaq Composite gained 367 points, or 2.92%, to 12949.

What’s driving markets

US stock benchmarks headed for fresh gains, with the spotlight squarely on Federal Reserve monetary policy.

The Fed has all but promised a quarter-percentage point interest-rate increase, with market attention focused on projections of future rate rises, comments on its balance sheet strategy and the news conference with Chairman Jerome Powell.

Meanwhile, China on Wednesday announced a far-reaching change to its policy stance, saying it would support its economy with monetary policy, attempt to limit the negative economic impact from policy changes, and work with US regulators over delisting concerns. The statement sent Hong Kong-listed tech giants including Alibaba BABA,
+ 22.04%
and Baidu BIDU,
+ 22.63%
soaring and the Hang Seng Index closed up 9%.

Traders also were hopeful of diplomatic talks between Russia and Ukraine to end the war. A Russian negotiator said Ukraine has proposed having a smaller and nonaligned military. Ukrainian President Zelensky addressed the US Congress on Wednesday, calling for stiffer sanctions against Russia and more help, including military equipment, from Western countries to defend itself against the unprovoked invasion of his country.

President Joe Biden was scheduled to deliver a separate address on developments in Ukraine at 11:45 am ET, where he may announce $ 1 billion in aid to Kyiv.

Against that backdrop, Eddy Elfenbein, portfolio manager of the AdvisorShares Focused Equity ETF, expects volatile markets to continue as long as the S&P 500 is trading below its 50-day average, which on Tuesday was 4454. “Rates are going higher and the market’s focus is changing. Since November, low-volatility stocks have been back in favor. This trend will probably last for several months, ”he said.

In economic reports, sales at US retailers slowed sharply in February, rising 0.3%, and Americans probably bought fewer goods like groceries, consumer electronics and furniture and after factoring in high inflation. Economists polled by The Wall Street Journal had forecast a 0.4% advance.

The previously reported 3.8% increase in sales in January, however, was raised to 4.9%, the government said Wednesday.

Which companies are in focus?
  • Shares of coffee-maker Starbucks
    SBUX,
    + 7.40%
    were in focus after it announced the return of company founder Howard Schultz as CEO on an interim basis, as Kevin Johnson, who has led Starbucks for five years, plans to step down on April 4.

  • Shares of battered Chinese stocks were rebounding after brutal losses in recent days, with US-listed shares of Alibaba Group Holding
    BABA,
    + 22.04%,
    JD.com
    JD,
    + 29.69%
    and Pinduoduo Inc. PDD,
    + 43.87%
    were up double-digits.

  • Shares of NortonLifeLock
    NLOK,
    -10.53%
    were under pressure after the company’s proposed acquisition of Avast raised competition concerns.

How are other assets faring?
  • The yield on the 10-year Treasury note TMUBMUSD10Y rose around 2 base points to 2.18%, heading toward a fresh 52-week high, according to Dow Jones Market Data. Yields and debt prices move opposite each other.

  • The ICE US Dollar Index DXY, a measure of the currency against a basket of six major rivals, was down 0.5%.

  • Gold for April delivery GCJ22 GC00 traded 0.4% lower at $ 1,920.90 an ounce.

  • Bitcoin BTCUSD was up around 1.6% at about $ 40,400.

  • The Stoxx Europe 600 SXXP, + 2.49% closed 0.3% lower, while London’s FTSE 100 UKX, + 1.24% fell 0.2%.

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