Wall Street jumps as earnings gather momentum, Fed meeting nears

NEW YORK, Oct 30 (Reuters) – Wall Street rallied on Monday, surging at the start of what promises to be a hectic week marked with a heavy earnings docket, economic data, and the Federal Reserve’s two-day monetary policy meeting and subsequent interest rate decision.

A broad rally sent all three major U.S. stock indexes sharply higher, a partial rebound from the previous week’s sell-off. Interest rate sensitive megacap stocks, led by Microsoft Corp , Amazon.com (AMZN.O), and Apple Inc (AAPL.O) provided the most upside muscle.

Third-quarter earnings season, firing on all cylinders, has reached its halfway point, with 251 of the companies in the S&P 500 having reported. Of those, 78% have beaten Wall Street estimates, according to LSEG.

Analysts now expect, on aggregate, annual third quarter S&P 500 earnings growth of 4.3%, a marked improvement over the 1.6% year-on-year growth seen at the beginning of October.

“Some common themes we’re seeing is companies are adjusting to a higher interest rate environment,” said Joseph Sroka, chief investment officer at NovaPoint in Atlanta, who also noted that “disruption from the supply chain seems to be lessening.”

In the coming week, Caterpillar Inc (CAT.N), Apple Inc , Pfizer Inc (PFE.N) and Starbucks Corp (SBUX.O) are among the higher profile companies expected to post results.

On Tuesday, the Federal Open Markets Committee (FOMC) is expected to convene for a two-day monetary policy meeting, which is expected to culminate in a decision to let the Fed funds target rate stand at 5.25%-5.50%.

The accompanying statement and Fed Chair Jerome Powell’s subsequent Q&A session will be scrutinized for clues regarding the central bank’s path forward with rates.

“I think the Fed is going to hold interest steady on Wednesday and the market would be looking for some indication that they’re done raising rates for the year,” Sroka added. “Powell and the other (FOMC) members are probably content to let the cumulative effect of past rate increases appear, and unless there’s data contradicting the direction of inflation they’re probably done. “

The Bank of England and the Bank of Japan would also be announcing rate decisions this week, with the latter set to consider a further adjustment to its yield curve control (YCC) framework, according to a Nikkei report.

Closely watched economic data is on tap this week, culminating in the U.S. Labor Department’s October employment report due on Friday.

Geopolitical strife arising from the Israel-Hamas conflict as well as a surge in Treasury yields have weighed on stocks in recent weeks, dragging the benchmark S&P 500 (.SPX) down about 10% from its intraday high in July.

The Dow Jones Industrial Average (.DJI) rose 495.88 points, or 1.53%, to 32,913.47, the S&P 500 (.SPX) gained 47.33 points, or 1.15%, to 4,164.7 and the Nasdaq Composite (.IXIC) added 144.02 points, or 1.14%, to 12,787.04.

All 11 major sectors of the S&P 500 were green, with communication services (.SPLRCL) enjoying the biggest percentage gain.

McDonald’s (MCD.N) reported better than expected quarterly results, driven by demand for its more affordable food as consumers contend with ongoing inflation pressures. Its shares gained 2.2%.

Onsemi (ON.O) tumbled 19.5% after the chipmaker forecast weak fourth-quarter revenue on slowing demand for electric vehicles.

Western Digital Corp (WDC.O) jumped 7.8% after the company disclosed plans to separate itself into two independent public companies.

Realty Income (O.N) slid 5.6% following its announcement that it would by Spirit Realty Capital (SRC.N) in an all-stock deal valued at $9.3 billion. Spirit Realty Capital advanced 8.1%.

Advancing issues outnumbered declining ones on the NYSE by a 1.94-to-1 ratio; on Nasdaq, a 1.59-to-1 ratio favored advancers.

The S&P 500 posted no new 52-week highs and 44 new lows; the Nasdaq Composite recorded 13 new highs and 321 new lows.

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