US STOCKS-S&P 500 crosses 7,000 mark ahead of Fed decision, Big Tech earnings

By Pranav Kashyap and Twesha Dikshit

Jan 28 (Reuters) - The S&P 500 crossed the 7,000 mark for the first time on Wednesday and the Nasdaq inched towards a fresh record, helped by gains in chip stocks, with investors gearing up for a Federal Reserve rate decision and quarterly earnings results of Big Tech companies.

The move through the psychological level underscored risk appetite tied to AI optimism and expectations for strong corporate results, which outweighed lingering geopolitical concerns.

"These big round numbers can be difficult psychological tests for the market. So certainly from a technical analysis perspective, we think it's a very positive sign," said Jeff Buchbinder, chief equity strategist for LPL Financial.

Tech stocks led gains as Nvidia NVDA.O climbed 1.8%, Intel INTC.O jumped 9%, and Micron MU.O and Microchip Technology MCHP.O each gained over 4%. SK Hynix, a key Nvidia supplier, reported a record quarterly profit and ASML booked its highest ever fourth-quarter orders, igniting a tech rally from Europe to Asia.

The Philadelphia SE Semiconductor index .SOX rose 2.3%.

The Fed convenes later in the day for its rate decision, with policymakers widely expected to keep it unchanged at 3.5%–3.75%. Traders will watch out for the Fed's statement and Chair Jerome Powell's remarks, for clues on the future rate trajectory.

"We would expect any (Fed rate) cuts that come in 2026 to be accompanied by economic growth, that is certainly a key piece of our positive stock market outlook for 2026. We would argue that the earnings and AI investment is a bigger deal and should be the focus of investors more so than the Fed," Buchbinder added.

Wall Street has rebounded to trade higher, with attention shifting to the earnings story after U.S. President Donald Trump's threats to acquire Greenland had led to bouts of sell-offs earlier this month, sending safe-haven gold soaring.

At 09:32 a.m. ET, the Dow Jones Industrial Average .DJI rose 118.82 points, or 0.24%, to 49,122.23, the S&P 500 .SPX gained 22.45 points, or 0.32%, to 7,001.05 and the Nasdaq Composite .IXIC gained 150.01 points, or 0.63%, to 23,967.11.

The U.S. central bank, which recently started receiving real-time data on the economy's health after a partial government shutdown last year, is navigating policy while peering through an increasingly politicized fog.

This meeting arrives in the backdrop of a Justice Department inquiry launched earlier this month involving Powell as well as Trump's hints that a successor will be named "soon".

The markets currently expect the first rate cut to come in June, according to CME's FedWatch tool.

"MAG 7" KICKS OFF EARNINGS

Meta META.O, Microsoft MSFT.O and Tesla TSLA.O report after market close, kicking off the so-called "Magnificent Seven" earnings that have driven the AI trade, powering markets to record levels.

With lofty valuations driving rotation into undervalued areas of the market, the group's capital plans will be closely watched as investors question whether AI spending will drive returns.

Texas Instruments TXN.O surged 6% after the analog chipmaker forecast first-quarter revenue and profit above Wall Street estimates. Starbucks SBUX.O jumped 6.7% after posting a bigger-than-expected increase in first-quarter comparable sales. AT&T T.N climbed 4% after the U.S. carrier projected annual profit above market expectations.

In industrials, GE Vernova GEV.N raised its annual revenue forecast, shares rose 2%. Textron TXT.N fell 6.2% after guiding fiscal profit below estimates, while Otis OTIS.N dropped 5% after fourth-quarter revenue missed expectations.

Meta and Microsoft were flat, while Tesla gained 0.5%. Bellwether IBM IBM.N, also due to report after the market closes, was flat.

Seagate Technology STX.O jumped 14.5% after it forecast third-quarter revenue and profit above Wall Street expectations. Rival Western Digital WDC.O rose 7.7%.