The Nasdaq powered up to lead markets higher Wednesday afternoon, helped by a lift from artificial intelligence leader Nvidia and an indication from Federal Reserve that interest rates reductions could be in the cards for September. The Fed news sent all three major indexes surging on the stock market today before they pared some gains.
The Nasdaq composite picked up momentum and surged more than 3% at one point before settling back to a 2.6% jump. The tech-heavy index appeared to break past its 50-day moving average after falling below the key measure a week ago. Meanwhile, the S&P 500 did retake its 50-day line, pushing 1.6% higher.
The Dow Jones Industrial Average remained the weakest Wednesday afternoon as it was pulled down by Microsoft. Blue chips ended the day 0.2% higher.
Finally, the small-cap Russell 2000 added 1%, though it was up more than 2% at one point.
Volume was higher on both the Nasdaq and New York Stock Exchange vs. the same time Tuesday. Winners beat losers by roughly 5 to 3 on the Nasdaq and 9 to 5 on the NYSE.
In the bond market, the 10-year Treasury yield shed eight basis points to sit at 4.06%. And U.S. crude oil prices rose to $78.39 a barrel.
Notes On The Fed Meeting; Nvidia Rockets Higher
Federal Reserve Chairman Jerome Powell indicated the Fed might consider a possible rate cut at its September meeting, which sent markets soaring briefly. Stocks settled back somewhat but still surged generally higher off the Fed news.
Powell noted that the Fed's decision will be data driven. He also explained the economy is growing at a solid pace while the labor market is cooling off, the latter of which could bode well for lowering rates.
The CME FedWatch tool now puts the chances of a quarter-point rate cut at 82% in September. It also sees the prospect of a half-point cut at 18%. Earlier, the odds of a quarter-point cut were at 94%.
Elsewhere, IBD Leaderboard stock Nvidia rocketed nearly 13% higher after software titan Microsoft talked about increasing its capital expenditures, including artificial intelligence infrastructure. Nvidia registered its largest increase since Feb. 22, when it rose 16.4%, according to Dow Jones Market Data.
3:35 p.m. ET
Stock Market Today: Powell Says September Cuts 'Could Be On Table'
After the Federal Open Market Committee concluded its two-day meeting on Wednesday, Fed Chair Powell said the panel is getting closer to making a cut, but not at that point yet. He said the Fed can afford to begin to dial back interest rate restrictiveness.
"It's just a question of seeing more good data," Powell added. But he said a rate cut in September "could be on the table."
Powell added they are not making any decisions about future meetings at this time, including the September meeting. He said they are going meeting by meeting and assessing incoming data in its totality.
The Fed chair reiterated the Fed's main goals of maximum employment and stable prices. He pointed out that current 4.1% unemployment rates are historically low.
2:30 p.m. ET
Economic News: Federal Reserve Leaves Rates
After its second day of meetings Wednesday, the Fed announced it is keeping its benchmark rate at 5.25% to 5.5%, as expected. The Federal Open Market Committee said it is not appropriate to reduce the target fed funds rate until it has greater confidence that inflation is closer to its 2% target.
The statement cited a rising unemployment rate but noted it remains low. The panel also noted that inflation has dipped but is still somewhat elevated.
The CME FedWatch tool suggests there is an 94% likelihood of a 25-basis-point cut during the September meeting. It also rates a 50-basis-point cut as possible, though with only a 6% chance.
1:20 p.m. ET
Stock Market Today: Power Stocks Bolt Higher
Powell Industries soared more than 35% in heavy trading after the company topped fiscal third-quarter profit and sales estimates. The electrical energy solutions stock reclaimed its 50-day line on the stock market today. Shares are rebounding after a failed breakout from a cup-with-handle base with a 183.49 buy point in late May.
Nuclear power providers rocketed higher after PJM Interconnection's, the largest U.S. electrical grid operator, announced that prices jumped more than 800% at its annual power market auction. One of those was Constellation Energy, which spiked more than 11% in robust volume on the power news.
In the process, Constellation stock breached its 21-day exponential moving average, before retreating. Shares remain below their 50-day line. Constellation reports its second-quarter results on Aug. 6.
Vistra leapt 15% in heavy action and was looking for support at its 21-day exponential moving average. Like Constellation, Vistra resides below its 50-day line. The power provider is due to release second-quarter numbers on Aug. 8.
12:02 p.m. ET
Insurance Stock Flashes Sell Signal
Carlyle Group broke out of an irregular base in heavy volume and reached a 48.52 buy point. Shares are in the 5% buy zone that goes up to 50.95. The investment firm stock reached a 52-week high. Carlyle stock has gained 24% so far this month after climbing from the bottom of its base and recapturing its 50-day line.
Johnson Controls broke out of a flat base and reached the 74.23 buy point at the start of the session, before retracing below the entry. The electronics maker beat fiscal third-quarter adjusted earnings but missed sales expectations. The stock is on pace for its largest increase since April 6, 2020, when it rose 7.62%, according to Dow Jones Market Data.
IBD 50 stock Lemonade skidded 16% in heavy volume after the insurance provider reported a smaller-than-expected second-quarter loss on higher revenue than views. But investors clued in on its third-quarter revenue outlook that came in below estimates.
The stock has now given back all of a 22% gain, and then some, from a double-bottom-base breakout with a 20.19 buy point. The drop triggered a round-trip sell signal. Shares are back below the entry on the stock market today.
10:53 a.m. ET
Employment Report
The July ADP Employment Report came up short of estimates with 122,000 private payrolls vs. the 154,000 expected. The number also trailed June's 155,000 revised reading.
Stock Market Today: Microsoft Falls
Dow Jones component pulled back nearly 2% after the tech giant topped fiscal fourth-quarter earnings and sales estimates but reported weak Azure cloud-computing growth. It also gave a current quarter sales forecast that disappointed.
The Magnificent Seven stock remains below its 50-day line but was holding above its 200-day moving average.
Nvidia may have risen in sympathy with Advanced Micro Devices, which jumped more than 5% on the stock market today after the company topped second-quarter adjusted profit and revenue projections. Management also provided a third-quarter sales forecast above views. The stock is below its 200-day line and its relative strength line has been on a downtrend since March.
Elsewhere, ASML Holding gapped up around 7% on Reuters news the Dutch chip-gear maker was likely to be exempt from the Biden administration's crackdown on foreign companies that export chips to China. The stock had plummeted after its recent second-quarter earnings report when it offered an outlook on third-quarter revenue that fell below views. ASML remains below its 50-day line.
Stocks Rally On AI, Rate-Cut Optimism; Meta Jumps Late
Stock Movers: Arista Pops
Arista Networks surged more than 8% after the computer networking company reported adjusted second-quarter earnings and sales that were higher than expected. It also gave a current quarter revenue outlook above estimates. Arista reclaimed its 50-day line in the process.
Lantheus Holdings lost 6% in recent trades after the medical diagnostics developer missed second-quarter adjusted profit estimates, though sales beat views. But it also lowered its third-quarter profit forecast.
First Solar popped 3% following the company's higher-than-expected sales and earnings for the second quarter. This follows Tuesday's 4.3% drop. Shares remain below the 50-day line.
Pinterest gapped down more than 13% in huge volume on the stock market today after the idea sharing platform operator topped second-quarter views but gave third-quarter sales estimates below analyst forecasts. Its steep drop below the 200-day line triggered a sell signal.
Follow Kimberley Koenig for more stock market news on X/Twitter @IBD_KKoenig.
