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The Street
The Street
Business
Martin Baccardax

Stock Market Today: Stocks end mixed as markets debate Fed rate path

 Updated at 4:12 PM EDT

Back where we started

Stocks closed mixed after a rollercoaster session Wednesday that saw the S&P 500 give back nearly 50 points from its late-session peak as investors parsed through details of a hawkish Federal Reserve policy meeting that has largely erased any hopes of a near-term rate hike.

The S&P 500 ended 17 points, or 0.34% lower on the session, with the Dow grinding out an 88 point advance and the Nasdaq falling 52 points, or 0.33% by the closing bell. 

Treasury yields, however, moved firmly lower in the wake of the Fed's signaling of slower bond sales starting in the summer months, with 2-year notes pegged at 4.960% and 10-year notes at 4.630%.

"Sticky inflation means higher rates for longer, but just how much higher for how much longer?," asked Jason Pride, chief of investment strategy and research at Glenmede "Investors that may have been hoping for an imminent rate reprieve may be setting themselves up for disappointment."

"The base case going forward appears to be shifting to just one rate cut this year around the fall, but that path is going to be highly dependent on how inflation trends unfold into the summer season," he added.

Updated at 3:29 PM EDT

Holding gains

A moderately less-hawkish press conference from Fed Chair Jerome Powell, during which he dismissed both the chances of a rate hike and the specter of near-term stagflation, has stocks chugging higher late into the session.

"The Fed’s plan to slow its balance sheet runoff should be a positive for the bond market, and it’s something the Committee likely wouldn't do if it felt that it would need to raise rates in the not-too-distant future," said Brent Kenwell, U.S. investment analyst at eToro. 

"With rate hikes off the table, that should be a positive for stocks and bonds. So should the idea that Chair Powell doesn’t see stagflation as a risk right now," he added.

The S&P 500 was last marked 47 points, or 0.98% higher on the day while the Dow gained 487 points and the rate-sensitive Nasdaq jumped 215 points, or 1.37%.

Updated at 2:44 PM EDT

Buy the fact? 

Stocks are getting a surprise late-session boost from the Fed statement, which has essentially signaled that investors shouldn't expect a rate cut until much later in the year.

The offset, it seems, is coming from the Fed's decision to slow the pace of Treasury sales from its balance sheet, a move that is largely focused on the banking sector but will hold overall bond yields in place even with its hawkish rate outlook.

Fed Chairman Jerome Powell also said its "unlikely" that the next Fed move would be a hike. 

Benchmark 2-year note yields were last marked 8 basis points lower on the session at 4.956% while 10-year note yields fell 5 basis points to 4.591%.

The S&P 500 was last marked 35 points, or 0.72% higher while the Nasdaq gained 168 points, or 1.07%.

Updated at 2:16 PM EDT

Dovish .. kind of 

The Fed held its key lending rate steady at between 5.25% and 5.5% as expected Wednesday, but said it would slow the pace of its bond sales by a bigger-than-expected amount, suggesting a dovish tone to an otherwise hawkish rate outlook.

U.S. stocks pared earlier declines immediately following the Fed decision, with the S&P 500 marked 7 points lower, or 0.15%, on the session and the Nasdaq marked 10 points, or 0.05%, in the red.

The Fed also said it would slow the pace of bond sales from its $7.4 trillion balance sheet from $60 billion per month to $25 billion per month, starting in June.

Benchmark 10-year Treasury-note yields slipped 2 basis points to 4.632% following the interest rate decision while 2-year notes fell 2 basis points to 5.002%.

Updated at 10:39 AM EDT

Working market

The Labor Department's latest Jolts report showed just under 8.5 million jobs went unfilled in March, a modest decline from the 8.81 million tally recorded in February and the lowest in three years.

Prior to the 2020 pandemic, however, the Jolts total hovered around 7 million, with an average of around 6.45 million over the prior four years.

The so-called quits rate, meanwhile, held at 2.2%, suggesting solid labor market momentum heading into the second quarter.

"While some categories showed slight softening, the operative phrase in the report was, “changed little', which occurred seven times," said Robert Frick, corporate economist at Navy Federal Credit Union.

"That’s good news considering the labor market is not only expanding at a healthy clip, but we may be seeing another upsurge in jobs added given this year’s trend," he added.

Updated at 9:36 AM EDT

Soft start to May

The S&P 500 was marked 5 points lower, or 0.1%, in the opening minutes of trading while the Dow rose 116 points thanks in part to the early 2.8% gain for Amazon. The Nasdaq, meanwhile, slipped 18 points, or 0.11%.

Updated at 9:18 AM EDT

CVS ill-health

CVS Health  (CVS)  shares are slumping in early trading, and likely to extend their 2024 decline to around 25%, after the group slashed its full-year profit forecast on the back of soaring medical costs and added margin pressures from changes to the Medicare Advantage rebate program.

CVS were last marked 13.5% lower in pre-market and set to open at around $58.45 each

Related: CVS tumbles as Aetna faces soaring medical costs and Medicare Advantage hit

Updated at 8:54 AM EDT

AMD slide

Advanced Micro Devices shares were last marked 5.7% lower in premarket trading, and set to open at the lowest levels since early January, after the chipmaker forecast muted near-terms sales for its AI-related chips.

AI demand has exceeded anyone's expectations in 2024. So you've heard it from the memory guys. You've heard it from the foundry guys," said CEO Lisa Su. "We're all ramping capacity as we go through the year. And as it relates to visibility, we do have good visibility into what's happening."

Related: Analysts revise AMD price targets as stock hit by muted AI sales forecast

Updated at 8:34 AM EDT

Strong Jobs gain from ADP

ADP National Employment report showed a better-than-expected private sector hiring tally of 192,000 for the month of April, perhaps setting up for an upside surprise in Friday's non-farm payroll report. 

“Hiring was broad-based in April,” said chief economist Nela Richardson. “Only the information sector (telecommunications, media, and information technology) showed weakness, posting job losses and the smallest pace of pay gains since August 2021.” 

Economists are looking for a headline gain of around 250,000 from the Labor Department on Friday, with unemployment holding at 3.8% and average hourly earnings rising 0.3% on the month.

Stock Market Today

Stocks tumbled across the board on April 30, dragging the S&P 500 80.5 points, or 1.57%, lower on the session for its biggest single-day decline since late January as investors parsed data showing a big jump in first quarter employment costs and navigated declines in each of the so-called Magnificent 7 megacap tech stocks.

Treasury yields, meanwhile, powered higher, lifting benchmark 2-year notes firmly north of 5% following the employment-cost index data, which further pared bets that the Fed would cut rates between now and the end of the year.

Investors will be laser-focused on Fed Chairman Jerome Powell's messaging when he speaks to the media later today in Washington, where he is likely to reiterate the central bank's "higher for longer" stance on interest rates. 

Related: Fed faces fine-line walk between inflation hawk and slow-growth realist

No change in the Fed's benchmark lending rate, which currently sits between 5.25% and 5.5%, is expected from the Fed's two-day policy meeting, and markets are now pricing in only one rate reduction between now and the end of the year.

Wall Street also faces another busy session of earnings and data releases as well, with updates from Pfizer  (PFE) , Mastercard  (MA) , CVS Health  (CVS)  and Estee Lauder  (EL)  slated prior to the opening bell.

CVS Health slumped 12.2% after it slashed its full-year revenue forecast following weaker-than-expected earnings tied to soaring costs in its health insurance division.

Markets will be laser-focused on Fed Chairman Jerome Powell's statement to the media at 2:30 pm Eastern time.

The Labor Department's March Job Openings and Labor Turnover report, better-known as Jolts, is also slated for later in the morning, just after ADP's National Employment report at 8:15 a.m. Eastern time.

Futures contracts tied to the S&P 500, which ended April with a 4.16% decline, are priced for a 17 point opening bell decline while those linked to the Dow Jones Industrial Average suggest a 75 point pullback.

The tech-focused Nasdaq, which slumped 2.2% on Tuesday to extend its April decline to 4.41%, is called 90 points lower.

Starbucks  (SBUX)  shares are a notable early mover, plunging more than 13% after the world's biggest coffee chain slashed its full-year-sales forecast following softer first-quarter sales in both the U.S. and China.

Advanced Micro Devices  (AMD)  was also deep in the red, falling 6% after topping Wall Street's first-quarter earnings estimates but estimating full-year chip sales of around $4 billion, a modest $500 million increase from its prior forecast.

On the upside, Amazon  (AMZN)  shares rose 2% after the tech and online-retail giant posted stronger-than-expected first-quarter earnings, including more than $25 billion in revenue from Amazon Web Services. The gains were tempered, however, by a muted near-term sales forecast and a warning that capital spending would increase throughout the year.

More Wall Street Analysts:

In overseas markets, Europe's Stoxx 600 was marked 0.77% lower in midday Frankfurt trading. Britain's FTSE 100 edged 0.08% higher thanks in part to a weaker pound, which slipped to 1.2482 against the U.S. dollar.

Overnight in Asia, Japan's Nikkei 225 closed 0.34% lower in Tokyo, while the regionwide MSCI ex-Japan index was marked 0.29% into the final hours of trading.

Related: Veteran fund manager picks favorite stocks for 2024

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