The Dow completed its three-week slide on Friday as tech stocks shrugged off the hawkish comments from Federal Reserve officials that have increased the likelihood of a higher rate rise in September and prolonged the melt-up in Treasury rates.
All three major indices went up today: the S&P 500 by 1.5%, the Dow Jones Industrial Average by 1.2% (or 377 points), and the Nasdaq by 2.1%.
Although the new comments from Fed members maintained the pattern of increasing treasury rates, which is usually a drag on tech, big tech and chip companies combined to help propel the broader tech sector up by more than 2%.
Governor of the Federal Reserve Christopher Waller has advocated for “another large hike in the policy rate” to be implemented later this month.
Chairman Jerome Powell had promised the day before to keep raising interest rates “until the work [of decreasing inflation] is done.”
The probability of a rate rise by 75 basis points has increased to 91% from 57% after a surge of hawkish comments from Fed members this week. In addition, reports that the Biden administration is considering ceasing the release of oil from the U.S. Strategic Petroleum Reserve beyond October boosted oil prices, contributing to the broader market melt-up.
Among oil companies, Halliburton Company (NYSE: HAL), EOG Resources Inc (NYSE: EOG), and Baker Hughes Co (NASDAQ: BKR) performed the best, with Baker Hughes Co rising by more than 5%.
DocuSign and Zscaler saw their share prices rise after reporting solid profits, giving investors more reason to be optimistic.
Shares of Zscaler (NASDAQ: ZS) rose by more than 21% after the company disclosed quarterly earnings above Wall Street expectations on both the top and bottom lines.
Meanwhile, DocuSign (NASDAQ: DOCU) reported second-quarter earnings that were above projections and provided Q3 guidance that was stronger than anticipated.
Caterpillar (NYSE: CAT), a heavy machinery manufacturer, recently said it had resolved a lengthy tax dispute with the Internal Revenue Service.