Alphabet, Microsoft boost US stocks as market waits on Fed

A currency trader walks near the screens at a foreign exchange dealing room in Seoul, South Korea, Wednesday, July 27, 2022. Asian stock markets followed Wall Street lower Wednesday as traders prepared for a possible sharp interest rate hike from the Federal Reserve to cool inflation. (AP Photo/Lee Jin-man)

A currency trader talks near the screens showing the Korea Composite Stock Price Index (KOSPI), left, and the foreign exchange rate between U.S. dollar and South Korean won at a foreign exchange dealing room in Seoul, South Korea, Wednesday, July 27, 2022. Asian stock markets followed Wall Street lower Wednesday as traders prepared for a possible sharp interest rate hike from the Federal Reserve to cool inflation. (AP Photo/Lee Jin-man)

A currency trader walks near the screens showing the Korea Composite Stock Price Index (KOSPI), right, and the foreign exchange rate at a foreign exchange dealing room in Seoul, South Korea, Wednesday, July 27, 2022. Asian stock markets followed Wall Street lower Wednesday as traders prepared for a possible sharp interest rate hike from the Federal Reserve to cool inflation. (AP Photo/Lee Jin-man)

A currency trader walks near the screens showing the Korea Composite Stock Price Index (KOSPI), right, and the foreign exchange rate at a foreign exchange dealing room in Seoul, South Korea, Wednesday, July 27, 2022. Asian stock markets followed Wall Street lower Wednesday as traders prepared for a possible sharp interest rate hike from the Federal Reserve to cool inflation. (AP Photo/Lee Jin-man)

A screen teases the Federal Reserve rate decision on the floor at the New York Stock Exchange in New York, Wednesday, July 27, 2022. (AP Photo/Seth Wenig)

Traders work on the floor at the New York Stock Exchange in New York, Wednesday, July 27, 2022. (AP Photo/Seth Wenig)

Traders work on the floor at the New York Stock Exchange in New York, Wednesday, July 27, 2022. (AP Photo/Seth Wenig)

Traders work on the floor at the New York Stock Exchange in New York, Wednesday, July 27, 2022. (AP Photo/Seth Wenig)

Traders work on the floor at the New York Stock Exchange in New York, Wednesday, July 27, 2022. (AP Photo/Seth Wenig)

Traders work on the floor at the New York Stock Exchange in New York, Wednesday, July 27, 2022. (AP Photo/Seth Wenig)

Traders work on the floor at the New York Stock Exchange in New York, Wednesday, July 27, 2022. (AP Photo/Seth Wenig)

Traders work on the floor at the New York Stock Exchange in New York, Wednesday, July 27, 2022. (AP Photo/Seth Wenig)

Traders work on the floor at the New York Stock Exchange in New York, Wednesday, July 27, 2022. (AP Photo/Seth Wenig)

Traders work on the floor at the New York Stock Exchange in New York, Wednesday, July 27, 2022. (AP Photo/Seth Wenig)

Traders work on the floor at the New York Stock Exchange in New York, Wednesday, July 27, 2022. (AP Photo/Seth Wenig)

A sign for New York Stock Exchange is displayed on the floor at the NYSE in New York, Wednesday, July 27, 2022. (AP Photo/Seth Wenig)

Stocks are solidly higher in afternoon trading Wednesday after strong earnings from Google's owner Alphabet and Microsoft lifted investors' mood. Wall Street is also waiting to hear from the Federal Reserve, which will likely raise interest rates at the end of its two-day meeting.

The S&P 500 index was up 1.3% as of 1:29 p.m. Eastern. The gains more than made up for the benchmark index's losses from a day earlier. The Dow Jones Industrial Average was up 0.2% and the technology-heavy Nasdaq Composite was up 2.5%.

Smaller company stocks also gained ground, lifting the Russell 2000 0.7%.

Shares of technology heavyweights Microsoft and Google parent Alphabet rose 4.8% and 6.8%, respectively, after their latest quarterly reports. Boeing shares slipped 0.8% despite the aerospace company reporting it delivered more planes in the first quarter than it has since the start of the pandemic.

The Fed on Wednesday is expected to announce an increase of up to three-quarters of a percentage point in its benchmark interest rate, triple the usual size. Investors worry such aggressive action by the Fed and other central banks in Europe and Asia to control soaring inflation might derail global economic growth.

Stocks have been choppy this week following solid gains last week that were mainly fueled by better-than-expected reports on corporate profits.

Inflation remains at the forefront of investors' minds, however. Markets were spooked Monday after retail giant Walmart warned that its profits are being hurt by rising prices for food and gas, which are forcing shoppers to cut back on more profitable discretionary items such as clothing.

The retailer’s profit warning in the middle of the quarter was rare and raised worries about how the highest inflation in 40 years is affecting the entire retail sector.

Technology and communication services stocks accounted for a big share of the S&P 500's gains. Nvidia rose 4.9% and Netflix added 3.6%.

Retailers, restaurant chains and other companies that rely on direct consumer spending also helped lift the market. Chipotle Mexican Grill jumped 12.8% after the restaurant chain reported second-quarter earnings that beat analysts’ forecasts.

Spotify Technology vaulted 12.4% after the music streaming service reported monthly active user and premium subscriber numbers that exceeded the Street’s expectations.

Investors will get quarterly results from Ford Motor Co. as well as Facebook’s parent company Meta Platforms after the closing bell.

Bond yields were mixed. The two-year Treasury yield, which tends to move with expectations for the Fed, rose to 3.07% from 3.06% late Tuesday. The 10-year yield, which influences mortgage rates, fell to 2.76% from 2.79%.