4:12 pm: Alphabet shares stumble for unexpected reason
The Dow closed Wednesday down 208 points, 0.6%, at 33,949, the Nasdaq Composite slid 203 points, 1.7%, to 11,911 and the S&P 500 lost 46 points, 1.1%, to 4,118. The small-cap focused Russell 2000 dropped 28 points, 1.4%, to 1,995.
The benchmarks reversed course after a rally Tuesday in the wake of positive comments on inflation from Fed Chair Jerome Powell.
“It’s the continued kind of yin-and-yang, if you will, with, ‘Which way are we going with the Fed?,’” said Sal Bruno, CIO of IndexIQ, as reported by CNBC. “We should expect a lot of choppiness.”
Among the laggards was Alphabet Inc (NASDAQ:GOOG), shares of which dropped more than 7% to $100 after the company's AI chatbot answered a question incorrectly in a demonstration.
Chipotle Mexican Grill (NYSE:CMG) Inc stock also fell after the company posted revenue that missed Street expectations. Shares of the fast-casual chain closed 5% lower at $1,636.09.
12:05 pm: Optimism from Fed Chair Powell’s speech fizzles
US stocks were lower in noon trading as the optimism following Federal Reserve Chairman Jerome Powell‘s speech fizzled as investors digested the latest batch of corporate earnings.
At midday, the Dow fell 172 points to 33,984, while the S&P 500 eased 39 points at 4,125 and the tech-heavy Nasdaq slipped 169 points to 11,944.
“It’s the continued kind of yin-and-yang, if you will, with, ‘Which way are we going with the Fed?,’” IndexIQ CEO Sal Bruno said.
“We should expect a lot of choppiness,” he added.
Notable movers included shares of CVS Health Corporation, which rose 4% after the company said it agreed to acquire Oak Street Health Inc for about $10.6 billion including debt.
9.35am: Powell-powered rally loses momentum
US stocks started the day modestly lower, unable to maintain a rally inspired by Fed chair Jerome Powell's comments on Tuesday around “disinflation” alongside a warning that interest rate hikes were not done.
Just after the market opened, the Dow Jones Industrial Average had shed 123 points or 0.4% at 34,033 points, the S&P 500 had dipped 18 points or 0.4% at 4,146 points, and the Nasdaq Composite was down 70 points or 0.6% at 12,043 points.
Forex.com market analyst Fiona Cincotta noted that stocks had edged lower, correcting modestly after the Nasdaq closed almost 2% higher on Tuesday on Powell’s comments.
“Attention will shift towards comments from more Federal Reserve policymakers with speeches from New York fed president John Williams Atlanta fed president Bostic and Minneapolis Fed president Neal Kashkari,” she said.
“Investors will be watching closely for clues over whether the US central bank is getting close to pausing its rate hikes cycle.”
Meanwhile, Uber shares raced up 6.3% just after the open on a 4Q 2022 revenue and bookings beat.
6.30am: Walt Disney and Uber report today
Wall Street is expected to open lower as investors continue to digest comments from Federal Reserve Chair Jerome Powell that confirm further rate hikes lie ahead, while they also await earnings from the likes of Walt Disney and Uber.
Futures for the Dow Jones Industrial Average (DJIA) fell 0.2% in Wednesday pre-market trading, while those for the broader S&P 500 index dropped 0.3%, and contracts for the Nasdaq-100 shed 0.2%.
In an interview at The Economic Club of Washington yesterday, Powell acknowledged that inflation has begun to decline but said interest rates would still have to rise as the Fed battles to return inflation to 2%.
US stocks rallied towards the close, with the DJIA ending 0.8% higher at 34,157, the Nasdaq Composite closing 1.9% up at 12,114, and the S&P 500 gaining 1.3% to 4,164.
“Investors appear a little relieved at Fed Chair Jerome Powell sticking to last week's script despite Friday's jobs report indicating that the labour market remains red hot,” commented Craig Erlam, senior market analyst at OANDA. “It would appear traders had become a little more defensive on the expectation of a hawkish shift but Powell refrained from taking the leap.”
Erlam noted that the market is getting a consistent message from policymakers across various central banks. While headline inflation is falling and will likely fall much further, core services inflation remains a big concern, and tight labour markets make achieving lower wage growth consistent with 2% inflation targets very difficult.
“It's been clear for a while that the journey back to 2% was likely to be more treacherous than the path to peak inflation, and the data in the first quarter in particular, perhaps the second also, was going to highlight that,” he added. “Recent jobs reports alone have epitomized that and sentiment in the markets is likely to continue mirroring it in the coming months.”
Apart from Walt Disney and Uber, YUM! Brands, Fox Corp, MGM Resorts and Coty are among the company's reporting quarterly earnings today.