The major stock market indexes closed lower as selling picked up in the final 90 minutes of trading Wednesday.
Investors listened to Fed Chair Jerome Powell as he gave new comments on monetary policy. Powell will address the Senate Banking Committee on Thursday. His testimony Wednesday offered no major surprises, but the market took it as a chance to take profits.
"Nearly all (Fed officials) expect that it will be appropriate to raise interest rates somewhat further by the end of the year," Powell said in prepared testimony. "Given how far we've come, it may make sense to move rates higher but to do so at a more moderate pace," he added.
Last week, the Fed paused interest rate hikes as a "prudent" step to allow the Fed to evaluate the effects of its tightening. But it also indicated that two more rate hikes may be needed to temper inflation.
Stock Market Index Moves
The Nasdaq closed 1.2% lower as Big Tech stocks pulled back. The Dow Jones Industrial Average lost 0.3%. The S&P 500 fell 0.5%. The Russell 2000 ended 0.2% lower.
The Innovator IBD 50 ETF dropped 0.6%. NYSE volume fell and Nasdaq volume rose, according to preliminary data.
IBD 50 Stock And Coatings Stock Hit Buy Points
Tidewater rallied nearly 5% after BTIG initiated coverage with a buy rating and a 75 price target, reports said. The stock is forming a base with a 51.88 buy point.
IBD 50 stock Intra-Cellular Therapies hit the 66.56 buy point of a flat base. The company is not profitable yet but has posted increasing quarterly revenue growth, including a 172% jump in its Q1. Intra-Cellular specializes in small-molecule drug treatments for neurological diseases, such as Alzheimer's.
Auto aftermarket products maker XPEL jumped 5.2% and topped the 80 buy point of a flat base. Shares of the protective film and coatings manufacturer are in the 5% buy zone reaching to 84. Analysts project 51% profit growth this year and 30% next year.
IBD 50 stock ELF Beauty popped another 4% after a BofA Securities analyst raised the price target to 120 from 105 and maintained a buy rating on the cosmetics and skin care stock.
The analyst sees ELF's increased marketing spending as boosting net sales to 27% growth in fiscal 2024, from 25% previously projected. ELF has shown accelerated EPS and sales gains for four straight quarters. Shares have gained an impressive 100% this year so far.
IBD 50 stock Chipotle Mexican Grill gained 1.2%, after Wedbush raised its price target to 2,300 from 2,200 and maintained its outperform rating. The stock has been trading bullishly tight for weeks.
Futures: Nasdaq Leads Pullback; Chip Giants Diverge
Other Stock Market Action: Tesla, Li
EV giant Tesla stock dropped 5.5% in heavy volume after Barclays downgraded the stock to equal weight from overweight but raised its price target to 260 from 220. Shares are above the 25% profit goal from a 207.79 buy point, having more than doubled already this year.
Meanwhile, competitor Chinese EV maker Li Auto rallied after China announced a four-year extension on its tax break for electric vehicle purchases, according to Reuters. The continued tax benefit is designed to reignite slowing auto sales.
Discount retailer Dollar Tree rallied 4.6% after Chairman and CEO Rick Dreiling gave a positive outlook at its Investor Day on Wednesday.
"Dollar Tree is on an exciting path of accelerating sales and profit," said the CEO. He said the company plans to generate over $10 earnings per share by full-year 2026. Current FactSet analyst EPS estimates are for $6.07 in the current fiscal year 2023 ending next January and $7.29 in the following year.
Follow Kimberley Koenig for more stock market news on Twitter @IBD_KKoenig.
