Stock market indexes reversed lower at midday Wednesday, just as the S&P 500 hit an important resistance level. Microsoft fell after confirming plans for more layoffs.
The S&P 500 erased morning gains and was down 0.9% at midday. The index closed the past two days above its 200-day moving average but dipped below the line. It also appears to be hitting resistance at the 4,000 level. Both are important tests for the stock market's uptrend.
The Nasdaq composite, which was up 1%, fell 0.7% and on pace to end a seven-day win streak. The Dow Jones Industrial Average fell 1% and is testing the 50-day moving average. The Russell 2000 turned a gain of nearly 1% to a drop of 0.5%.
Volume increased on the NYSE and Nasdaq compared with the same time on Tuesday.
Innovator IBD 50 ETF still outperformed with a 0.4% increase but it had been up more than 1%.
IBD 50 stock MercadoLibre rose above a 1,095.44 buy point but faded below it. It remains above another entry at 1,039.49.
Breakout attempts for BP and Interactive Brokers also faded.
But Impinj's breakout held up. The chip designer jumped above a 129.12 buy point. It's already above a buy zone to 135.58.
Inflation, Retail Reports Give Stock Market Early Lift
Stock market futures added to gains after two economic reports came out before the open, at 8:30 a.m. ET.
The producer price index (PPI) for December came in cooler than expected, up 6.2% on an annual basis and down 0.5% from the previous month. Prices excluding food and energy were basically in line with views, up 5.5% yearly and 0.1% month over month.
U.S. retail sales fell 1.1% in December, and dropped an equal amount excluding auto sales. The holiday-season numbers were weaker than expected.
The combination of limp economic activity and easing prices was welcome news for a stock market hoping to see the end of the Fed's tightening cycle.
"Despite rising incomes and excess savings, American consumers are tightening their belts in the face of still-high inflation, rising credit costs, and shrinking wealth," said BMO Capital Markets Senior Economist Sal Guatieri. "The especially weak December retail sales report and recent better inflation numbers reinforce our call for the Fed to slow the pace of rate hikes to 25 bps on Feb. 1."
Yields wobbled and stocks momentarily added to gains after St. Louis Fed President James Bullard said he expects inflation will still be elevated by year's end, with rates between 5.25% and 5.5%. He also believes that "prospects for a soft landing have improved." Bullard is a nonvoting Fed member this year.
The yield on the 10-year Treasury note slid 11 basis points to 3.42% at midday.
Market Reverses Lower On Hawkish Fed, Weak Economic Data
Microsoft To Cut 10,000 Jobs
Dow component Microsoft reversed lower 1.4% and dipped right back below its 50-day moving average. The company plans to cut 10,000 jobs, less than 5% of the tech giant's global workforce.
United Airlines also reversed lower after rising to the highest since April. The company beat fourth-quarter sales and profit expectations. The gain extended a rally that tops 30% so far this month.
Charles Schwab fell more than 3% in heavy volume, leaving the stock teetering at its 50-day line. The brokerage firm missed fourth-quarter estimates.
The meme-stock rally slowed. Bed Bath & Beyond added 14% this morning but was up less than 1% at midday. AMC Entertainment reversed lower to a loss of more than 5%.
The Tokyo Nikkei 225 index surged 2.5% after the Bank of Japan kept interest rates unchanged, defying market expectations. In December, BoJ raised the cap for the yield on 10-year government bonds to 0.5% from 0.25%.
The Shanghai Composite was nearly flat. The Hong Kong Hang Seng climbed 0.5%, leaving this month's advance at nearly 10%.
