Stock market today: Wall Street rallies as economy keeps growing, profits keep rising

NEW YORK (AP) — Stocks are rallying on Wall Street following fatter-than-expected profit reports from big companies and the latest signals that the economy continues to defy predictions for a recession. The S&P 500 was 0.8% higher in early trading Thursday, near its highest level in more than 15 months. The Dow was up 83 points, or 0.2%, and on track for a 14th straight gain. The Nasdaq composite was leading the market with a gain of 1.5% following a strong profit report from Meta Platforms. Treasury yields were rising after a wave of reports indicated the economy is in stronger shape than expected.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

Wall Street is poised to open higher Thursday as markets digest the Federal Reserve ‘s latest interest rate hike and another big batch of corporate earnings.

Futures for the S&P 500 jumped 0.7% before the bell, the Dow Jones industrials rose 0.2%, on track to extend its astounding streak of gains to 14 days.

Wednesday’s higher close cinched the longest Dow winning streak since 1987, all the more notable because of a concerted effort by the Fed to cool the economy.

The Fed raised its federal funds rate another quarter-point on Wednesday, to a range of 5.25% to 5.50%, in hopes of wrestling down high inflation. That’s its highest level since 2001 and up from virtually zero early last year.

Fed Chair Jerome Powell said no decision had been made about whether to raise rates at its next meeting or beyond. That may have bolstered hopes among traders that Wednesday’s hike could be the last for a long time.

Powell said rates will likely need to stay high for a while to drive inflation lower.

“It’s really dependent so much on the data, and we just don’t have it yet,” Powell said.

Rate increases work to lower inflation by grinding down on the entire economy, raising the risk of a recession and hurting prices for investments. Ending them would encourage more borrowing and investment.

The economy has so far defied predictions for a recession, largely because of a remarkably solid job market that has allowed U.S. households to keep spending. That has hopes rising that the Federal Reserve can pull off a “soft landing” for the economy where high inflation falls back to its target without a painful recession.

Companies have mostly been surprising investors with solid results this reporting season, though expectations were modest.

McDonald’s rose almost 2% in premarket trading after it reported strong second-quarter sales, thanks in part to a marketing campaign celebrating the “birthday” of its big purple mascot Grimace that went viral.

Shares of Southwest Airlines slumped more than 6%, even after the carrier said labor costs soared in the period, offsetting record revenue at the start of the peak summer travel season.

Ford Motor Co. reports after the bell Thursday.

Also coming later is the government’s first estimate of U.S. gross domestic product — the economy’s total output of goods and services —- for the second quarter. The Labor Department also issues its latest report on jobless claims, which represent layoffs.

The European Central Bank raised interest rates for the ninth straight time in its yearlong campaign to stamp out painfully high inflation, even as worries about recession fuel speculation that the hike Thursday could be its last.

And Japan’s central bank may alter its longstanding ultra-lax monetary policy at a policy meeting that ends on Friday.

The 0.25 percentage point hike took the ECB’s benchmark rate to 4.25%.

In Europe at midday, Paris’s CAC jumped 1.5%, Germany’s DAX climbed 1.1% and Britain’s FTSE 100 inched up 0.3%.

In Asian trading, Tokyo’s Nikkei 225 index gained 0.7% to 32,891.16.

The Bank of Japan’s approach has increasingly diverged from the actions of the U.S. Federal Reserve and the world’s other central banks. It has kept its benchmark interest rate at minus 0.1% for a decade, trying to spur more investment and consumer spending, with mixed results.

Japan’s inflation has crept higher, surpassing the U.S. rate of 3% with June inflation at 3.3%. But the central bank’s policymakers appear unconvinced that the higher rates are likely to be sustained as other major economies slow, denting demand for Japanese exports.

Hong Kong’s Hang Seng index jumped 1.4% to 19,639.11, while the Shanghai Composite index slipped 0.2% to 3,216.67.

In Australia, the S&P/ASX 200 added 0.7% to 7,455.90. South Korea’s Kospi climbed 0.4% to 2,603.81. In India, the Sensex fell 0.7% to 66,277.15.

Bangkok’s SET rose 1.3% and Taiwan’s benchmark gained 0.5%.

In other trading Thursday, U.S. benchmark crude oil gained 73 cents to $79.51 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, added 60 cents to $83.16 per barrel.

The dollar fell to 140.16 Japanese yen from 140.25 yen. The euro rose to $1.1138 from $1.1087.

On Wednesday, the S&P 500 slipped less than 0.1% and was near a 15-month high. The Dow rose 0.2% and the Nasdaq composite inched down 0.1%.

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Kurtenbach reported from Bangkok; Ott reported from Silver Spring, Md.