Stocks ended mixed Wednesday as investors looked to adjust Federal Reserve interest-rate forecasts amid a surprisingly resilient domestic economy and renewed inflation pressures.
The Dow Jones Industrial Average finished down 0.11% to 39,127.14, marking its third straight day of losses, while the S&P 500 gained 0.11% to 5,211.49 and the tech-heavy Nasdaq rose 0.23% to 16,277.46.
Intel shares finished down 8.2% after the chipmaker unveiled a $7 billion operating loss in its nascent foundry business last year, a nearly 35% increase from 2022 levels.
Fed Chair Jerome Powell repeated his view that rate cuts are likely to begin later this year, but said he and his colleagues "have time to let the incoming data guide our decisions on policy." and would act on a "meeting by meeting" basis.
Updated at 1:35 PM EDT
Bob's House of Mouse
Disney DIS shares slipped lower in late Wednesday trading after the media and entertainment group said CEO Bog Iger won a shareholder vote aimed at ceded boardroom control to billionaire activist investor Nelson Peltz.
"With the distracting proxy contest now behind us, we’re eager to focus 100% of our attention on our most important priorities: growth and value creation for our shareholders and creative excellence for our consumers," Iger said in a statement that followed a vote to re-elected all 12 of Disney's current board.
Disney shares were last marked 1.54% lower at $120.95 each following news of the board vote, a move that would trim the stock's 2024 gain to around 33%.
That’s it!
— Luiz Fernando (@Luiz_Fernando_J) April 3, 2024
The drama that could fill a whole new season of #Succession is finally over, as in a major win for #BobIger, the $DIS shareholders rejected the addition of #NelsonPeltz at the #Disney’s Board of Directors, with the results of the votes just announced ending one of the… pic.twitter.com/WRs7R2XS45
Updated at 12:16 PM EDT
Powell patience
Fed Chair Jerome Powell repeated his view that rate cuts are likely to begin later this year, but said he and his colleagues "have time to let the incoming data guide our decisions on policy." and would act on a "meeting by meeting" basis.
"Recent readings on both job gains and inflation have come in higher than expected," Powell told an event at the Stanford Graduate School of Business. "Recent data do not, however, materially change the overall picture, which continues to be one of solid growth, a strong but rebalancing labor market, and inflation moving down toward 2% on a sometimes bumpy path."
⚠️FED SWAPS STEADY AFTER POWELL, SEE AT LEAST TWO 2024 CUTS
— *Walter Bloomberg (@DeItaone) April 3, 2024
Updated at 11:09 AM EDT
Solid gains
Stocks are adding to late-morning gains, with the S&P 500 up 0.39% on the session and the Nasdaq rising 0.56% as the easing inflation data from the ISM services survey looks to offset some hot wage data from the ADP Employment Report.
"Most numbers have pointed to an economy that is leaning a little more to the hot side than the cool side," said Chris Larkin, managing director for trading and investing at E*Trade from Morgan Stanley.
"That said, there hasn’t been anything that would derail the idea of second-half rate cuts," he added. "A major upside surprise in Friday’s jobs report or more hot inflation readings next week could change the outlook, but for now, the numbers still appear to be in the “more of the same” zone the Fed has said it wanted to see."
Updated at 10:07 AM EDT
Softening prices
The Institute of Supply Management's benchmark survey of activity in the services sector, the biggest drive of U.S. growth, showed a surprise dip in new orders and a slowdown in overall price gains.
The prices paid index, which slowed to 53.4, was the lowest since March of 2020 and suggests one of the key components of inflation pressures could be easing into the spring and summer months.
Stocks bounced higher on the data, with the S&P 500 last marked 14 points, or 0.25%, while the Dow gained 135 points. The Nasdaq was up 0.05%.
Benchmark 10-year note yields eased to 4.381% while 20year notes fell 2 basis points to 4.695%.
What ISM manufacturing giveth the 'higher for longer' trade, ISM services taketh away
— Michael Brown (@MrMBrown) April 3, 2024
Updated at 9:49 AM EDT
EV U-turn?
Tesla TSLA shares extended declines in early trading, falling to the lowest levels in nearly a year and extending its 2024 slump past 33%, as analysts line up to alter their price targets on the EV maker following yesterday's first quarter delivery figures and its detailed earnings update on April 23.
Related: Analysts see big strategy shift from Elon Musk after Tesla delivery debacle
Updated at 8:56 AM EDT
No rush on rates
Atlanta Fed President Raphael Bostic repeated his view that rate cuts likely won't be needed in a stronger-than-expected economy until later this year, given both the "bumpy" path of inflation and a robust job market.
Speaking with CNBC Wednesday, Bostic said he was in "no rush" to upset the dynamic of strong growth and consistent job creation, and suggested the first and only 2024 rate cut he would approve would likely come over the final three months of the year.
US Fed's Bostic sees one rate cut in 2024...in Q4. Buckle up! 🤔 pic.twitter.com/slIpwYqzcR
— Mathan Soma (@Mathan_Soma) April 3, 2024
Updated at 8:23 AM EDT
Hot jobs market
ADP reported a stronger-than-expected gain of around 184,000 new private sector hires last month, the biggest gain since July, with the payroll processing group's February tally revised by 15,000, to 155,000.
The report also noted a big jump in salary increases for job-changers, which surged to 10%, offsetting a relatively stable 5.1% gain for those remaining in their current positions.
Updated at 7:56 AM EDT
Foundry losses
Intel (INTC) shares are a big early mover, falling 4.4% in heavy pre-market volume, after the chipmaker unveiled a $7 billion operating loss in its nascent foundry business last year, a nearly 35% increase from 2022 levels.
CEO Pat Gelsinger, in fact, told investors Tuesday that the division's losses will deepen again this year, and likely won't break even until 2027.
$INTC is down 2% AH after sharing financials for the last 3 years based on its new reporting structure. The "Intel Products" segment (mostly CPUs) had an $11.3B op. profit last year, while the "Intel Foundry" segment (manufacturing) had a $7B op. loss. pic.twitter.com/ZkuEaL6Gia
— Eric Jhonsa (@EricJhonsa) April 2, 2024
Stock Market Today
Stocks ended lower again Tuesday, with the S&P 500 shedding around 38 points, as benchmark 10-year note yields hit a four-month high of 4.4% following stronger-than-expected job-openings data for February and hawkish comments from various Fed officials.
Benchmark 10-year notes were last marked at 4.365% heading into the start of the New York trading session, with 2-year notes holding at 4.705%.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.03% lower at 104.785.
Traders are still pricing in a 60%-plus chance that the Fed will begin the first of its three forecast 2024 rate cuts in June, but they continue to eye labor market and inflation data ahead of Friday's key March jobs report.
Payroll processing group ADP will publish its reading on private-sector job creation prior to the start of trading, with investors looking for a headline total of around 148,000 new hires.
Markets will also digest PMI and ISM services data ahead of Fed Chairman Jerome Powell's speech to the Stanford Business, Government and Society Forum in California late in the session.
"Powell's recent remarks have hinted at delayed rate cuts, and while expectations lean towards a neutral stance, market participants anticipate Powell to maintain a cautious approach," said Bas Kooijman, asset manager at DHF Capital in the Netherlands.
"He is expected to weigh the prospect of future rate adjustments against prevailing economic conditions, a scenario that may uphold a strong greenback," he added.
On Wall Street, investors will also look to the impact of Tuesday's 7.2-scale earthquake in Taiwan, the largest in 25 years, on supply chains in the chip sector while also awaiting results from Disney's annual shareholder meeting and proxy battle.
Futures contracts tied to the S&P 500 were last marked for an opening-bell decline of around 6 points, while the Dow was called 15 points lower.
The tech-focused Nasdaq, which is up 8.19% for the year, is priced for a 35 point decline.
Overnight in Asia, the Taiwan earthquake rattled regional markets, with the MSCI ex-Japan index falling 0.95% into the close of trading and the Nikkei 225 ending 0.97% lower in Tokyo.
Europe saw a surprising slowdown in Eurozone inflation, which saw headline pressures easing to 2.6% and the core reading dipping under 3%. That cemented the prospect of a June rate cut from the European Central Bank and lifted the Stoxx 600 into positive territory in Frankfurt.
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