U.S. stocks climb as investors wait on Fed decision - The Washington Post

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Stocks got an upbeat start to trading Wednesday after two days of breathtaking volatility, as investors awaited the outcome of the Federal Reserve’s first meeting of 2022.

The Dow Jones industrial average leaped about 275 points at the opening bell, and by around 12:30 was trading up more than 360 points, or 1 percent. The blue-chip index had just limped out of another day of turbulence that saw it stage a more than 1,000-point comeback and still close in the red. The S&P 500 index, battered by losses in five of the last six trading sessions, gained more than 1.6 percent. The tech-heavy Nasdaq, which has taken steep losses as investors rotated away from pricey stocks that have been pandemic favorites, rose about 2.4 percent.

The Fed meeting will set the tone for a critical year of monetary policy, one that is likely to be among the most hawkish in recent memory according to Danielle DiMartino Booth, chief executive and chief strategist of Quill Intelligence. Recent market swings are unlikely to divert the Fed from the rate hikes and balance sheet reduction strategies it has been telegraphing for months, Booth said Wednesday in comments emailed to The Post.

“The Fed is faced with choosing a lesser of two evils,” Booth said, between implementing necessary policy measures that will bring down surging inflation, and risking limiting business activity and taking money out of an already-slowing economy. “Inflation is the Federal Reserve’s biggest worry right now.”

Some measure of certainty will arrive for Wall Street later Wednesday afternoon, when the central bank will release a policy statement. Fed Chair Jerome H. Powell will also hold a news conference regarding the central bank’s plans.

Sentiments were also higher in overseas trading Wednesday, with European indexes registering healthy gains across the board, led by Germany’s DAX, which climbed 2.2 percent. Asian markets also closed broadly positive, with the exception of Japan’s Nikkei 225, which declined around .4 percent.

Oil prices continued their upward march, boosted by steady production and the ongoing threats and possible ramifications of a Russian invasion of Ukraine. Brent crude, the international oil benchmark, climbed more than 2.2 percent to around $89 per barrel. West Texas Intermediate, the U.S. oil benchmark, rose more than 2.5 percent to trade roughly $87.80 per barrel.

Investors are pricing in the risks the conflict presents to an already embattled sector, which also has been shaken by a recent series of missile strikes in the Middle East and the ongoing effects of the pandemic.

“It’s still unlikely that oil and gas will be used as a weapon any time soon, but if it was, it could lead to a serious surge in prices given how tight the markets are,” Craig Erlam, senior market analyst with OANDA, said Wednesday in comments emailed to The Post.

On Tuesday, the Biden administration confirmed that it was trying to secure energy for European allies in case Russia cuts off oil and gas exports in response to sanctions imposed for an invasion of Ukraine, according to reporting from CNBC.

“If Russia decides to weaponize its supply of natural gas or crude oil, it wouldn’t be without consequences to the Russian economy,” a second senior administration official told the news outlet.

Meanwhile, the grind of earnings season continues, with Tesla and Intel scheduled to report after the market close. Boeing’s shares rose 2 percent in early trading after the aviation giant reported it generated positive cash flow last quarter for the first time since 2019. Investors have been otherwise tough to impress, with giants like Verizon and 3M seeing shares fall despite earnings beats.

Ivan Feinseth, chief investment officer of Tigress Financial Partners, said the cadence of Q4 earnings is “failing to provide market support, at least in the near term, even as companies like Microsoft report record earnings.” Microsoft’s revenue rose 20 percent year over year last quarter, the tech giant reported after the market close Tuesday, but shares initially dropped in trading but turned positive after the company released a better-than-expected sales forecast. A pandemic-trading favorite, Microsoft’s net income rose 21 percent to more than $18.7 billion in the fourth quarter.

The market’s receptiveness to earnings could shift in the coming weeks as more companies report, Feinseth noted in commentary Wednesday. But after a year of bombastic corporate earnings (buffeted by easy comparisons to 2020), it will be challenging for big names to maintain the same level of growth in a less supportive environment.

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