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Wall Street Soars: Hopes for Federal Reserve Policy Shift and Meta's Impressive Growth

Wall Street experiences a surge as investors anticipate the end of the Federal Reserve's policy tightening and Meta Platforms' robust quarterly forecasts come to light.

Wall Street sign
Wall Street sign

Meta Platforms' Revenue Triumph Fuels Wall Street Surge

Wall Street's major indexes experienced a surge on Thursday, influenced by expectations of the Federal Reserve's policy tightening concluding. An optimistic economic outlook suggested that the largest global economy was heading for a soft landing. Adding fuel to this optimism was the tech giant Meta Platforms, which saw a significant surge, thanks to a robust forecast for its third-quarter revenue.

Meta's stock soared 6.8%, largely driven by a surge in its second-quarter advertising revenue that comfortably exceeded Wall Street's predictions.

Tech Giants Lead the Charge; Dow Jones Indices Close Gap

Major growth stocks, especially mega-cap tech companies, have propelled Wall Street's upward trajectory this year, with Nasdaq leading the race. However, the Dow Jones Industrial Average is steadily catching up, indicating a broadening investor interest that extends beyond the tech sector.

The blue-chip Dow is making remarkable strides, now on a 14-day winning streak - its longest since 1897, according to Howard Silverblatt, a senior index analyst at S&P Dow Jones Indices. Meanwhile, the S&P 500 is only 4.8% away from setting a new record high.

The Federal Reserve Impact: Interest Rates and Economic Forecasts

The US Federal Reserve increased the interest rates by 25 basis points as anticipated last Wednesday. Traders currently forecast a slim 20% probability of another quarter-point rise in September.

Jerome Powell, the Federal Reserve Chairman, assured on Wednesday that Fed staff is no longer anticipating a U.S. recession. A Commerce Department report on Thursday bolstered this optimistic stance, indicating faster-than-expected economic growth in the most recent quarter.

Major Moves in Tech, E-commerce, and Airlines

In contrast to Meta's success, eBay forecasted a third-quarter profit that fell short of market expectations. This was due to increased spending to enhance categories such as auto parts, refurbished goods, and collectibles, resulting in an 8.7% dip in its shares.

Shares of prominent chipmakers Nvidia, Micron, and Marvell Technology rose by over 3% each following Lam Research's forecast of positive quarterly sales. Lam's shares skyrocketed by 10.3%.

However, not all industries enjoyed a positive ride. Southwest Airlines shares plummeted by 9.1% due to a slump in their second-quarter profit. On the brighter side, Royal Caribbean enjoyed a 10.7% surge after uplifting its annual profit forecast.

ECB Continues Interest Rates Hike; NYSE and Nasdaq See Mixed Results

The European Central Bank (ECB) continues its trajectory of interest rate hikes, marking the ninth consecutive increase and remaining open to further adjustments.

However, it's a mixed bag on Wall Street, with declining issues outnumbering advancers on the NYSE and the Nasdaq. The S&P index recorded 44 new 52-week highs and one new low, while the Nasdaq documented 80 new highs and 56 new lows.