NEW YORK — Wall Street's bang to start the year got even bigger Thursday as tech stocks and a surge for Facebook's parent company led the market higher.
The S&P 500 rallied 1.5% a day after hitting its best level since August. The Nasdaq composite soared 3.3%, while the Dow Jones Industrial Average lagged because it has less of an emphasis on tech. It slipped 39 points, or 0.1%.
Meta helped lead the way with a 23.3% leap after it reported better revenue for the latest quarter than analysts expected and said it expects to spend less this year than forecast. While its latest profit fell short of expectations, Facebook's parent also announced a program to buy back $40 billion of its stock.
Stocks already were on the upswing through the start of the year on hopes that the Federal Reserve may be set to pause soon on its hikes to interest rates. Such increases help stamp out inflation but also hurt the economy and investment prices.
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A day earlier, stocks and bonds took off after Fed Chair Jerome Powell said the central bank is finally starting to see progress in its battle against inflation. Markets took that as a cue that a pause may indeed be imminent, and investors even raised bets for cuts to rates late this year.
That's despite Powell saying on Wednesday that a couple more rate hikes will likely be appropriate to get inflation down to the Fed's target. He also said he did not foresee any rate cuts in 2023 and again pledged to "stay the course until the job is done" on beating inflation.
"The market is saying the Fed may have its cake and eat it, too: inflation falling and growth not falling off a cliff so far," said Ella Hoxha, senior investment manager at Pictet Asset Management.
She said the market seems to be putting a 75% probability on the Fed engineering a "soft landing" for the economy, where inflation can drop from its soaring heights without sending the economy into a painful recession.
"We would say at best it's 50%, potentially lower," Hoxha said.
Thursday's rally stretched across the Atlantic, where markets rose after central banks for Europe and the United Kingdom also raised rates in their efforts to squelch inflation.
The European Central Bank raised its key rate by 0.50 percentage points and said another would arrive next month. The Bank of England also raised its key rate by half a percentage point.
On Wall Street, big jumps for several Big Tech stocks helped lift the market ahead of their earnings reports, which came after trading closed for the day. Amazon and Google's parent company, Alphabet, both jumped more than 7%, while Apple rose 3.7%.
The next milepost for the market is Friday morning's U.S. jobs report, which economists expect will show a slowdown in hiring.
