The Nasdaq composite led the upside Wednesday afternoon as stocks spiked when Fed Chair Jerome Powell indicated interest-rate hikes will start decreasing in size as early as the Fed's December meeting.
The Dow Jones Industrial Average closed about 2.2% after trading much lower in the morning session. The Nasdaq traded up 4.4% once Powell's speech started. The S&P 500 reversed losses and was up 3.1% at the close. Volume was significantly higher on the Nasdaq and on the NYSE vs. the same time on Tuesday.
This week, the market rally had paused as the S&P 500 hit a resistance area at its 200-day moving average. The Dow Jones remains above its moving averages while the Nasdaq is fighting for support at its 50-day line.
Today's Powell speech, however, has moved the indexes higher. The Fed chair signaled that the Fed's intention is still to ease up on its pace of monetary policy tightening. After four straight 75-basis-point hikes so far this year, Powell all but confirmed a step down to a 50-basis-point increase. Today's speech was the last before the Fed's December rate-setting meeting.
"It makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down," Powell said in his speech. "The time for moderating the pace of rate increases may come as soon as the December meeting."
Additionally, the latest Beige Book, a regional report card prepared by the Boston Fed, echoed Fed Chair Powell's comments this afternoon. Priscilla Thiagamoorthy, economist with BMO Markets, said that the "overall summary from the 12 Districts struck a more cautious tone amid a cloudy economic outlook and further weakness in housing markets."
Earlier, the market was little affected by November employment data and quarterly GDP data released before the market opened. Monthly employment data from ADP showed that job growth fell from the previous month and came in below expectations for November. Meanwhile, the Commerce Department's GDP estimate revision reflected stronger growth than was initially expected by economists.
Dow Jones Stock With Earnings After The Close
A handful of earnings reports are due after the market closes today from the likes of Salesforce.com, Snowflake, Box and Pure Storage.
Dow Jones component Salesforce.com is expected to post earnings per share of $1.22 on revenue of $7.83 billion. Shares rose 1.6% Wednesday. CRM stock has been in a serious downtrend since the end of 2021 and has a lot of repair work to do before it becomes actionable.
Meanwhile, Pure Storage fell around 4% ahead of its earnings. PSTG stock dropped below its 50-day and 200-day moving averages, which is a bearish sign. The stock is now down roughly 8% for the week and has been falling in heavy volume. Pure Storage is expected to show EPS of 25 cents on sales of $672 million.
Software stocks Snowflake and Box also struggled on Wednesday. Box fell 3.5% while Snowflake was down around 0.4%. But Box is currently building out a consolidation with a 33.14 entry. Shares undercut their 50-day and 200-day lines on Wednesday and remain roughly 11% below the buy point. Analysts expect Box to show EPS of 30 cents on revenue of $251 million.
Follow Rachel Fox on Twitter at @IBD_RFox for more Dow Jones and stock market commentary.
