U.S. stocks on Wednesday fluctuated as traders geared up for the Federal Reserve’s latest monetary policy decision. Market participants are expecting a “hawkish hold” and comments from chair Jerome Powell that will probably show policymakers in no hurry to cut interest rates.
Investors had plenty of quarterly reports and economic data to wade through ahead of the Fed decision at 1400 ET.
The tech-heavy Nasdaq Composite (COMP:IND) was down 0.33% to 15,606.21 points in mid-day trade, while the benchmark S&P 500 (SP500) slipped 0.24% to 5,023.41 points. The blue-chip Dow (DJI) was higher by 0.29% to 37,925.95 points.
Of the 11 S&P sectors, six were in the green.
Technology slipped more than 1% on the back of a post-earnings slide in Super Micro Computer (SMCI) and Advanced Micro Devices (AMD). Despite solid results and strong guidance from the maker of artificial intelligence servers and the semiconductor company, both stocks slumped and were among the top percentage losers on the Nasdaq (COMP:IND). It is worth noting that expectations were lofty coming into their results.
Amazon.com (AMZN) was a bright spot, gaining about 2% after a better-than-expected performance at its Amazon Web Services cloud cash cow offset a soft current quarter guidance.
Starbucks (SBUX) was another major drag on both the Nasdaq (COMP:IND) and the S&P (SP500). The world’s largest coffee chain dropped some bombshells on its earnings conference call with some disappointing guidance for revenue and U.S. comparable sales growth.
Turning to Wednesday’s economic calendar, there were multiple indicators on the labor market and manufacturing. The former was a mixed bag, with ADP’s jobs report showing strong gains in private employment and the latest Job Openings and Labor Turnover Survey pointing to cooling in the number of job openings in March. The latter was largely negative, with S&P Global and Institute for Supply Management data showing a setback in U.S. manufacturing activity in April.
Looking at the fixed-income markets, yields were to the downside on Wednesday, after the Treasury Department kept its quarterly debt sales mostly steady. The longer-end 30-year yield (US30Y) was down 3 basis points to 4.76%, while the 10-year yield (US10Y) was down 2 basis points to 4.66%. The shorter-end more rate-sensitive 2-year yield (US2Y) was also down 2 basis points to 5.03%.
See live data on how Treasury yields are doing across the curve at the Seeking Alpha bond page.
Yesterday marked the end of April, a month in which Wall Street significantly dialed back its expectations of interest rate cuts which led to the benchmark S&P 500 (SP500) posting its worst monthly loss since September 2023.
“After a strong start to the year, April was a much tougher month in financial markets, with losses across several asset classes. In fact, the S&P 500 (SP500) fell back after a run of 5 consecutive monthly gains, whilst U.S. Treasuries had their worst month of 2024 so far. That was partly thanks to growing evidence of sticky U.S. inflation, which led to questions about whether the Fed would be able to cut rates at all this year,” Deutsche Bank’s Henry Allen said.
Today’s Fed commentary will probably give some clarity on future monetary policy actions.
“A few weeks ago, it seemed possible that the May Fed meeting might offer a chance to tee up a June cut. Not only is that dead, but the question now is whether the data will instead make this week’s meeting a waystation to a more hawkish summer pivot,” the Wall Street Journal’s Fed watcher Nick Timiraos said on X (formerly Twitter).
Read More: Stock Market News Today: Markets seesaw ahead of Fed rate decision (SP500)