US stocks surge as investors digest mega-cap tech earnings and prepare for another Fed rate hike

• US stocks jumped on Wednesday after Alphabet and Microsoft delivered second-quarter earnings that impressed investors.
• Mega-cap tech firms Amazon, Meta Platforms, and Apple are on deck for quarterly results later this week.
• The Fed is expected to hike interest rates by another 75 basis points at its meeting today.

US stocks jumped on Wednesday as investors navigate a busy week of mega-cap tech earnings and a highly anticipated Fed meeting.

Microsoft and Alphabet reported earnings late Tuesday that showed resilience amid a highly uncertain macro period that includes worries of an imminent recession. Both stocks were up more than 3% in Wednesday trades.

While missing revenue and profit estimates, Microsoft offered strong guidance that included double-digit revenue and income growth for its upcoming fiscal year. "MSFT bullish guidance for FY23 will be heard around the world and Street. Rock of Gibraltar in an economic storm," Wedbush analyst Dan Ives said.

Alphabet's earnings also missed analysts' revenue and profit estimates, but the results showed that its digital ad business is "not falling off a cliff and relatively stable," Ives said, essentially calming fears sparked last week by Snap's warning on the digital advertising market.

Here's where US indexes stood shortly after 2:00 p.m. ET on Wednesday:

• S&P 500: 3,975.25, up 1.38%
• Dow Jones Industrial Average: 31,8762.10, up 0.35% (110.51 points)
• Nasdaq Composite: 11,862.20, up 2.59%

Investors are now shifting their earnings focus towards Meta Platforms, Amazon, and Apple, all of which are expected to report results after the market close today (Meta) and on Thursday (Apple, Amazon).

Stocks held onto their gains after The Federal Reserve raised interest rates by another 75 basis points to a range of 2.25% to 2.50%. The decision was unanimous among Fed members highlighted their continued objective of taming inflation.

"The announcement of a 75-basis point hike would not surprise investors. Instead, the market's focus will be on searching for clues to the Fed's reaction function and how it may respond to upcoming data releases on inflation and economic activity," MSCI's head of portfolio management research Andy Sparks said.

Meanwhile, Russia's war against Ukraine continues to have an outsized impact on Europe, as it struggles with rising gas prices and shortages. On Wednesday, European power prices jumped to a record high as Russia slashed the supply of natural gas to the continent.

West Texas Intermediate crude oil rose 0.32% to $95.01 per barrel. Brent crude, oil's international benchmark, edged up 0.28% to $104.69.

Bitcoin rallied 1.16% to $21,308. Ether prices rose 3.12% to $1,469.

Gold fell 0.12% to $1,715.50 per ounce. The yield on the 10-year Treasury fell three basis points to 2.78%.