U.S. Stocks Edge Higher Ahead of Fed Decision

U.S. stocks inched higher Wednesday as investors bet that the Federal Reserve would reiterate support for an economy battered by the coronavirus pandemic.

The S&P 500 ticked up 0.8%, led by the technology sector. The Dow Jones Industrial Average rose about 85 points, or 0.3%. The tech-heavy Nasdaq Composite rose 1%.

Investors will be seeking clues at the end of Wednesday's policy meeting on how long the Fed plans to keep interest rates near-zero and what strategy it will take in coming months.

The Fed moved rapidly in the midst of the market rout in March to pump money into the economy, buoying U.S. stocks. The S&P 500 is now up 0.4% for the year. Although the central bank isn't expected to unveil any new stimulus measures Wednesday, analysts said the stock gains are one sign that investors expect the Fed to continue supporting markets.

"It's very hard to fight the central bankers and the amount of fiscal stimulus that's been introduced into the system," Chris Dillon, a capital markets investment specialist at T. Rowe Price Group Inc. "And more is expected to come."

The Fed is due to publish its decision at 2 p.m. ET, followed by a press conference by Chairman Jerome Powell. The Fed on Tuesday said it would extend emergency lending programs that had been set to run through September by an additional three months to keep propping up activity during the pandemic.

The Fed's aggressive interventions have created new conundrums for how investors should calculate the risks of the assets they hold even as the pandemic has left millions unemployed, and upended how people live and work.

The dollar slipped ahead of the Fed's decision. The WSJ Dollar Index, which tracks the U.S. currency against those of major trading partners, fell 0.2%.

In bond markets, the yield on 10-year U.S. Treasury notes rose to 0.584%, from 0.581% Tuesday.

The world economy will operate at 90% capacity until a vaccine removes the need for social distancing and other prevention measures, said Samy Chaar, chief economist at Swiss private bank Lombard Odier.

Earnings at major U.S. companies have so far beaten the gloomy expectations of analysts. Just over a third of firms in the S&P 500 had reported through Tuesday, posting a 38% decline in earnings from a year earlier, according to FactSet. Still, 78% of firms topped forecasts.

In earnings-related news, General Electric fell 5% after the industrial conglomerate said it burned through less cash in the June quarter than it had previously warned. General Motors reported a smaller loss than analysts had expected, and shares fell 3%.

L Brands jumped more than 30% after the embattled retail company said it plans to lay off about 850 corporate employees. Advanced Micro Devices rose 13% after the chip maker reported higher earnings and lifted its sales forecast for the year.

Tech stocks held strong ahead of the appearance of the chief executives of Amazon.com, Apple, Facebook and Google before Congress. The House Antitrust Subcommittee is investigating the market dominance of online platforms. The four stocks make up roughly a fifth of the S&P 500, according to FactSet.

Apple shares rose 1.1%, while Amazon, Facebook and Google parent Alphabet added about 0.5%.

"Scrutiny of the big tech firms is not new. It's been ongoing for some time," said Mona Mahajan, the U.S. investment strategist at Allianz Global Investors. She predicted that investors are buying tech stocks in hopes of profiting from a bounce after some tech firms report their quarterly results Thursday.

Ten of the 11 sectors in the S&P 500 traded higher Wednesday, led by the tech which added more than 1%. Utilities were the only group in the red, down 0.1%.

Overseas, the Stoxx Europe 600 index slipped less than 0.1%. China's Shanghai Composite Index advanced 2.1%, and Japan's Nikkei 225 fell 1.2%.

Write to Joe Wallace at Joe.Wallace@wsj.com and Dawn Lim at dawn.lim@wsj.com


  (END) Dow Jones Newswires
  07-29-20 1255ET
  Copyright (c) 2020 Dow Jones & Company, Inc.

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