Stocks finished down Wednesday, pulling back from the previous session's record close, amid the release of the minutes from the Federal Reserve's May 1 policy meeting and earnings release from AI-chip maker Nvidia.
The Dow Jones Industrial Average lost 201 points, or 0.51%, to end at 39,671.04, while the S&P 500 slipped 0.27% to close at 5,307.01 and the tech-heavy Nasdaq dropped 0.18% to 16,801.54.
After several unexpectedly high inflation readings, Federal Reserve officials concluded at the policy meeting that it would take longer than they previously thought for inflation to cool enough to justify reducing their key interest rate, now at a 23-year high, the Associated Press reported.
Minutes of the May 1 meeting, released Wednesday, showed that officials also debated whether their benchmark rate was exerting enough of a drag on the economy to further slow inflation.
Many officials noted that they were uncertain how restrictive the Fed’s rate policies are, the minutes said.
“Hawkish surprise (kind of) from the Fed minutes today has sent yields up and equities down,” Alex McGrath, chief investment officer for North End Private Wealth. “The investing world will have to wait at least another month to hear anything about rate cuts, but the kicker in this report was the willingness of some participants to restrict policy further which apparently, according to the markets action, was quite the surprise.”
McGrath said that growth based macro factors have weakened considerably since the last FOMC meeting while inflation factors have increased.
"Stagflationary conditions would be a pretty awful look for a Fed that believed inflation was transitory two years ago and very well could be the final nail in a political coffin for Biden," he said.
"That proverbial rock and a hard place the Fed wanted to avoid is staring them square in the face because should the macro data continue to slide and should inflation continue to be sticky, cuts coming to the rescue isn’t a solution and it’s the only tool they have in the bag at this point," McGrath added.
Updated at 12:27 PM EDT
UK elections
UK Prime Minister Rishi Sunak has called a general election for July 4 following weeks of speculation over his leadership of the ruling Conservative Party and its narrow majority in the House of Commons.
Current polls, however, place his party some 18 behinds behind the opposition Labour Party, lead by Kier Starmer.
These uncertain times call for a clear plan and bold action to chart a course to a secure future.
— Rishi Sunak (@RishiSunak) May 22, 2024
You must choose in this election who has that plan and who is prepared to take that bold action to secure a better future for our country and our children. pic.twitter.com/qlbgmYuGkM
Updated at 11:15 AM EDT
Tesla tumble
Tesla (TSLA) shares, while up 27% over the past month, are still down 27% for the year amid a slump in EV demand across key global markets.
Data from Europe, published today, added to that concern, showing overall registrations falling to the lowest levels since January of 2022.
Tesla shares were last marked 3.1% lower on the session at $180.88 each.
Related: Tesla has big problems in China. It might have a new one in Europe, too
Updated at 10:03 AM EDT
Volatility slump
The CBOE Group's benchmark volatility index, the VIX, closed at the lowest level in more than three and a half years last night, and recorded only marginal gains in the early Wednesday session.
The VIX, which represents a forward estimate of market volatility based on price data from puts and call options tied to the S&P 500, was last marked 0.42% higher at $11.91.
That suggests traders are daily price swings of 0.74%, or 39 points, for the S&P 500 over the next month. At the height of the pandemic, the VIX traded at around $60.50, a level that suggested daily swings of around 3.78%.
The $VIX ended the day at 11.86, its lowest close since November 2019.https://t.co/l5IYmkeySJ pic.twitter.com/TCjtaL8wUm
— Charlie Bilello (@charliebilello) May 22, 2024
Updated at 9:36 AM EDT
Mixed open, Target plunge
Target shares are down more than 10% in the opening minutes of trading, a move that would mark their biggest one-day decline since November of 2022, following a disappointing first quarter earnings report and slumping same-store sales.
Stocks are mixed otherwise, with the S&P 500 down 4 points, or 0.07% and the Nasdaq up 7 points, or 0.004%, ahead of Nvidia's after-the-bell earnings.
S&P 500 Opening Bell Heatmap (May 22, 2024)$SPY -0.10% 🟥$QQQ +0.12% 🟩$DJI -0.16% 🟥$IWM -0.36% 🟥 pic.twitter.com/TOhQcfzed2
— Wall St Engine (@wallstengine) May 22, 2024
Updated at 8:52 AM EDT
Buzzfeed buzz
Buzzfeed (BZFD) shares soared higher in premarket trading, potentially adding more than $45 million in market value, after Vivek Ramaswamy revealed a 7.7% stake in the online media group.
Ramaswamy's Securities and Exchange Commission filing, published late Tuesday, said the stock is undervalued and that the former Republican Presidential nominee plans to engage the board and management to enact changes.
Buzzfeed shares were marked 55% higher in premarket trading to indicate an opening bell price of $3.87 each.
Check back for updates throughout the trading day
Nvidia's first-quarter results, the final update from the so-called Magnificent 7 tech giants, has developed into one of the market's key events over the past year.
The artificial-intelligence-focused chipmaker is expected to post a fivefold increase in April-quarter earnings, with net income of $13.2 billion on revenue of $24.6 billion, after the close of trading.
Nvidia (NVDA) shares, which closed at $953.86 last night to extend their 2024 gain to 98%, were marked 0.4% lower in premarket trading.
Investors will also focus on its near- and longer-term outlook, given its dominant position in the AI supply chain and the hundreds of billions of capital-spending commitments from big customers like Microsoft (MSFT) , Amazon (AMZN) and Meta Platforms (META) .
Minutes of the Fed's May policy meeting are expected at 2 p.m. U.S. Eastern Time, with rate traders picking through any changes in the language of the central bank's inflation outlook ahead of next month's gathering in Washington.
CME Group's FedWatch tool, which suggests little chance of an interest-rate cut over the next two meetings in June and July, pegs the odds of a September reduction at around 60%.
That's down from around 69% earlier this week, however, and follows a disappointing inflation reading from Britain, which indicated stubborn core price pressures despite an easing in the headline rate.
U.S. Treasury bond yields ticked higher on the release, with 10-year notes rising to 4.437% and 2-year notes pegged at 4.86%.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.08% higher at 104.743.
Heading into the start of trading on Wall Street, futures contracts tied to the S&P 500 are set for a 6-point opening-bell decline. The broad benchmark extended its year-to-date gain to around 11.6% following last night's close.
Futures tied to the Dow, meanwhile, are called 34 points lower while the Nasdaq is set for a 30-point pullback.
Target (TGT) shares were a notable early mover, slumping 8.2% in premarket trading after the retailer posted weaker-than-expected fiscal-first-quarter earnings and falling same-store sales.
More Wall Street Analysts:
- Analyst unveils new Nike price target ahead of big summer for sports
- Analysts weigh in on Google-parent Alphabet’s stock after cloud event
- Analysts revamp Disney stock price target after proxy fight
In overseas markets, Britain's FTSE 100 slipped 0.3% in London following the April inflation report, while the pound eased to 1.2722 against the greenback.
The regionwide Stoxx 600, meanwhile, was marked 0.27% lower in Frankfurt.
Overnight in Asia, Japan's Nikkei 225 notched its second consecutive session decline, falling 0.85%, while the MSCI ex-Japan benchmark added 0.34% into the close of trading.
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