Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., January 26, 2022.
Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., January 26, 2022. Reuters / BRENDAN MCDERMID

The S&P 500 ended higher on Wednesday following a steep drop the day before, with strong revenue forecasts from Microsoft and Visa helping to alleviate worries about slowing global economic growth and rising interest rates.

Microsoft Corp rallied after the software heavyweight late on Tuesday gave a strong revenue forecast, while payments network Visa Inc jumped after it predicted revenue above pre-pandemic levels.

Tuesday's gains followed a steep selloff the day before that saw the Nasdaq drop to its lowest close since December 2020 as investors worried that the U.S. Federal Reserve might raise interest rates more than expected in its fight against inflation.

The S&P 500 communication services index fell sharply, with Google-parent Alphabet dropping after it reported that quarterly YouTube ad sales slowed and its revenue missed expectations.

"What we've really been seeing is that misses are being punished a little more severely, but that beats are also being rewarded," said Rob Haworth, a senior investment strategist at U.S. Bank Wealth Management in Seattle. "With interest rates where they are and the 10-year Treasury testing 2.8%, I think there is a big question about growth and valuations."

Facebook-owner Meta Platforms Inc declined ahead of its quarterly report after market close.

Planemaker Boeing Co tumbled after it said it was halting production of 777X jets through 2023 due to certification problems, as well as weak demand for the wide-body jet.

Nearly a third of the companies on the S&P 500 have reported results this week. Overall, earnings have been better than expected, with nearly 80% of the 176 companies in the S&P 500 that have reported so far beating Wall Street expectations. Typically, only 66% of companies beat estimates.

According to preliminary data, the S&P 500 gained 7.18 points, or 0.17%, to end at 4,182.38 points, while the Nasdaq Composite lost 3.56 points, or 0.03%, to 12,487.18. The Dow Jones Industrial Average rose 46.50 points, or 0.14%, to 33,286.68.

Tesla Inc was up for most of the session following a 12% slump on Tuesday related to concerns that Chief Executive Elon Musk may have to sell shares to fund his $44 billion buyout of Twitter Inc.

Toymaker Mattel Inc surged after a source told Reuters it was exploring a sale.

Audio streaming platform Spotify Technology SA's U.S.-listed shares tumbled following a downbeat current-quarter revenue forecast.