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* Microsoft, Texas Instruments climb on strong outlook
* All eyes on Fed's policy decision at 2 p.m. ET
* Mattel up on winning back Disney Princess license from
* Indexes up: Dow 1.48%, S&P 2.01%, Nasdaq 2.63%
Jan 26 (Reuters) - Wall Street's main indexes climbed after
two turbulent sessions on Wednesday and ahead of the outcome of
a Federal Reserve policy meeting, with a stellar outlook from
Microsoft boosting technology stocks.
The Fed policy decision is due at 2 p.m. ET (1900 GMT), with
the U.S. central bank expected to signal the start of an
interest rate hike cycle beginning March.
The announcement will be followed by Fed Chair Jerome
Powell's news conference, which will be parsed for clues on the
magnitude and pace of hikes for the year and strategy for
shrinking the central bank's roughly $9 trillion balance sheet.
Fed funds futures traders are pricing in a 25 basis point
hike in March, in addition to three more rate increases by the
end of the year.
"The Fed's biggest challenge is figuring out how to
implement policy measures that are hawkish enough to lower
inflation, but that also keep financial markets afloat, because
volatility in financial markets may bleed into an economy that
is already showing signs of slowing," said Danielle DiMartino
Booth, chief executive officer of Quill Intelligence in Dallas.
"The Fed is faced with choosing the lesser of two evils".
Ten of the 11 major S&P sectors advanced in early trading,
with technology and consumer discretionary
taking the charge.
Rate-sensitive growth stocks have recently been roiled by
fears of aggressive Fed action to combat inflation. Rising
geopolitical tensions around Russia and Ukraine have also
weighed on the market, with the S&P 500 index flirting
with a correction twice this week.
Microsoft Corp gained 4.8% after estimating
current-quarter revenue broadly ahead of market estimates,
driven in part by its cloud business. Chipmaker Texas
Instruments Inc rose 4.6% as it also gave a strong
The broader Philadelphia SE semiconductor index
"When rates rise valuation becomes more important so
earnings become more important to save the day. From a market
perspective, earnings going forward are going to be better,"
said Mike Skillman, CEO of Faith Investor Services in Dallas.
The fourth-quarter reporting season is in full stride.
Analysts expect S&P 500 companies' earnings to grow 24.4%
year-over-year, according to Refinitiv.
At 10:04 a.m. ET, the Dow Jones Industrial Average
was up 506.44 points, or 1.48%, at 34,804.17, the S&P 500
was up 87.40 points, or 2.01%, at 4,443.85, and the Nasdaq
Composite was up 356.00 points, or 2.63%, at 13,895.29.
The S&P 500 index is now down nearly 7.3% from its record
closing peak on Jan. 3, while the tech-heavy Nasdaq has
fallen 13.5% so far this year.
Tesla Inc added 4.6% ahead of its quarterly results
after market close.
Barbie maker Mattel jumped 10.2% on winning back
rights to make toys based on Disney Princesses from Hasbro Inc
Advancing issues outnumbered decliners by a 7.29-to-1 ratio
on the NYSE and by a 4.83-to-1 ratio on the Nasdaq.
The S&P index recorded 11 new 52-week highs and three new
lows, while the Nasdaq recorded 20 new highs and 24 new lows.
(Reporting by Susan Mathew, Devik Jain and Bansari Mayur Kamdar
in Bengaluru; Editing by Aditya Soni and Maju Samuel)