The major stock market indexes pulled back from afternoon highs on Wednesday. Nvidia and other chip stocks felt pressure from news that the U.S. could put more restrictions on chip exports.
Investors keyed in on Fed Chair Powell's morning speech at a policy panel discussion at the European Central Bank Forum in Portugal on Wednesday. "Policy hasn't been restrictive for very long … so we believe there's more restriction coming," Powell said.
Mr. Powell is scheduled to speak later in the day at a public chat with the governor of the Bank of Spain.
The 10-year U.S. Treasury yield shed 5 basis points to 3.71%. The Fed put a pause on rate hikes at its last meeting, but hinted that it will resume at the July meeting.
The CME FedWatch Tool showed over 80% odds for a quarter-point hike at the July Fed meeting.
The Nasdaq reversed course from morning lows and was up 0.2% on the day. The Dow Jones Industrial Average dipped 0.3%. The S&P 500 trimmed 0.1%. The Russell 2000 was flat.
The Nasdaq 100-tracking Invesco QQQ Trust ETF turned early losses into a 0.1% gain. The First Trust Nasdaq 100 Equal Weighted ETF was relatively unchanged.
The Innovator IBD 50 ETF gained 2%, outperforming the market indexes. NYSE volume was higher and Nasdaq was lower, compared with the same time on Tuesday.
Crude oil edged 2.8% higher to $69.61 per barrel. The price of bitcoin retreated 1.6% to $30,225.
European stocks closed higher, with the German DAX rising 0.6% and Paris CAC adding 1%. The London FTSE edged up 0.5%.
The Mortgage Bankers' Association mortgage applications Composite Index rose 3% for the week ended June 23, and easily outpaced the 0.5% increase the prior week.
Stock Market Action: Chip Stocks Under Pressure
The Biden administration is considering new restrictions on exports of artificial intelligence chips, according to a Wall Street Journal article released Tuesday night.
The Commerce Department could stop AI chip shipments by Nvidia and others to China and other countries of concern if they don't first obtain a license.
Leaderboard stock Nvidia eased from earlier larger losses, now down 1.5% on the news. Advanced Micro Devices backed off 0.7%, Broadcom shed 0.3% and Marvell Technology retreated 0.8%.
In addition to possible lost business for Nvidia, AMD and others, expanded chip export restrictions could spur China retaliation.
Beijing has already limited sales of Micron Technology chips to key customers, citing cybersecurity concerns. Micron trimmed a larger loss to a smaller 0.1% drop and will report its May-ended quarterly earnings Wednesday after the market close.
The VanEck Semiconductor ETF slid 1% on the news of possible further restrictions on chip exports.
Cruise Line Stocks Sail Higher
IBD 50 stock Carnival catapulted 7.9% in heavy volume after Citigroup reiterated a buy rating and held its 18 price target. The cruise line stock is a leader today in the IBD 50 and the S&P 500.
Shares are above the 20% profit zone of a cup base with a 12.62 buy point. Shares hit a 52-week high and have gained a whopping 113% this year so far.
Norwegian Cruise Line rallied 7.3% in heavy volume while Royal Caribbean added 1.9% in sympathy with Carnival. Both stocks also hit 52-week highs on the rally.
IBD 50 and Leaderboard stock MongoDB popped another 5.8% to hit a 52-week high. Shares of the data platform stock are up around 108% this year so far.
Cloud analytics software stock ZoomInfo Technologies soared 6% after Needham initiated coverage on the stock with a buy rating and a 35 price target. The company has an AI and machine learning focus.
Consumer products stock General Mills gapped down 4.6% in heavy volume after reporting worse-than-expected sales and higher fiscal fourth-quarter earnings. Shares fell further below its 200-day moving average. Shares are down over 8% on the year.
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Stock Market Movers: Network Stock Surges
Extreme Networks surged 6% in heavy volume after Oppenheimer initiated coverage with an outperform rating and a 35 price target on the stock.
Shares are above the buy zone of a long, choppy base with a 21.03 buy point. Shares tested the 21-day exponential moving average Tuesday, before today's big move.
Extreme provides cloud-based network infrastructure to industries including the government, financial services, health care, hospitality and manufacturing.
Axsome Therapeutics gapped down over 9% after the biopharmaceutical company announced a public offering of 3 million shares of its common stock at 75 per share.
Shares fell below the 50-day moving average, flashing investors a sell signal.
Defense drone maker AeroVironment jumped 3.5% after giving full-year earnings guidance that exceeded analysts' forecasts.
The positive outlook overshadowed the Q4 mixed earnings report of a miss on profits and a beat on sales. Shares retook the 200-day line on the move.
Spirit AeroSystems reversed lower 1.4% after reaching a tentative deal late Tuesday with striking workers on a four-year contract proposal, and will vote on it Thursday. Spirit Aero makes 737 fuselages for Boeing. Dow Jones stock Boeing rose 0.3% on the news.
Follow Kimberley Koenig for more stock market news on Twitter @IBD_KKoenig.
