US equities rose at the close of a tumultuous session on Wednesday as investors saw a series of corporate warnings about the impact of inflation on earnings along with the latest Federal Reserve statements on the use of its policies to curb rising prices. The minutes of the May meeting of the Fed reaffirmed that central bank officials saw additional rate hikes of 50 basis points as appropriate during the next meetings.
The S&P 500 faltered, but then gained on Wednesday afternoon following the release of Fed notes, which also noted that a more aggressive tightening and “a restrictive policy stance may be appropriate depending on the evolution of the economic outlook and the risks to the outlook “. The Dow and the Nasdaq also went up. Treasury yields declined mostly and the 10-year benchmark yield fell to just above 2.75%.
Investors have also seen this week a growing list of companies citing the effects inflation has had and will have on future results. Retailers like Walmart and Target last week to Dick’s Sporting Goods (DKS) and Abercrombie & Fitch (ANF) cut their earnings forecasts for the year this week as companies absorbed rising costs of transport and goods. Elsewhere, Snap (SNAP) warned earlier this week that it would post weaker-than-expected sales and earnings results this year, as the “macroeconomic environment” deteriorated faster and faster than expected. “. This was taken as a harbinger of smoother results for a group of advertising-driven tech stocks, which sent the Nasdaq Composite to its lowest close since Tuesday, November 2020.
As the company’s stance builds, Wall Street has been looking for signs that rising Federal Reserve interest rates and tightening monetary policy will be able to ease inflationary pressures. The Fed’s minutes of the meeting in early May on Wednesday afternoon reaffirmed that most monetary policy makers were considering raising rates by an additional 50 basis points at the next two Fed meetings. . The Fed raised interest rates by 50 basis points earlier this month for the first time since 2000, after raising interest rates by just 25 basis points earlier this year.
The story goes on
“The challenge right now is that we’re in this new chapter in the history of inflation. If you remember, last year it started with whether it was transitory; it turns out it wasn’t. last year and earlier this year, whether or not they were significantly hardened. And they did, and now it’s all worth it, “James Liu Clearnomics founder and CEO told Yahoo Finance Live. “And now what the market is looking at is basically the fundamentals of how inflation affects corporate profitability and consumer demand.”
And beyond domestic concerns, a myriad of international concerns, from the Russian war in Ukraine to the ongoing COVID outbreak in China, have instilled even more volatility in the market.
“The Fed can’t do anything about what’s going on between Russia and Ukraine, they really can’t do anything about China’s zero VOCID policies … and a lot of traders are starting to worry,” Shawn Cruz, TD Ameritrade. the chief trading strategist told Yahoo Finance Live.
“The way the market reacts to this is for me: there is a deleveraging. There are also some liquidation events, and this is one of those environments of the ‘sell generates more sell’ type. And then the other is that there is not enough confidence to go in and work again in a meaningful way, “he added. “Once you start to see that leverage is starting to rise, cash coming in from the band, that to me would be an indication that there is at least a little bit more certainty in the prospects for a lot of these people. on the sidelines to come. re-enter. “
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16:05 ET: Shares end turbulent session after Fed minutes: Nasdaq gains 1.5%, Dow adds 192 points, or 0.6%
These were the main movements of the markets from 16:05 ET:
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S&P 500 (GSPC): +37.25 (+ 0.95%) to 3,978.73
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Dow (^ DJI): +191.66 (+ 0.60%) to 32,120.28
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Nasdaq (IXIC): +170.29 (+ 1.51%) to 11,434.74
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Crude (LC = F): + $ 0.97 (+ 0.88%) to $ 110.74 per barrel
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Gold (GC = F): $ 11.80 (-0.63%) to $ 1,853.60 per ounce
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10-Year Treasury (^ TNX): -1.1 bp for a yield of 2.7490%
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2:15 pm ET: Fed minutes show support for two more midpoint rate hikes, while adding “a restrictive policy position” might be appropriate
The latest minutes of the Federal Reserve meeting on Wednesday afternoon reaffirmed previous claims by Fed Chairman Jerome Powell that the central bank was weighing two more than half a point.
“Most participants felt that 50 basis point increases in the target range would probably be appropriate at future meetings,” according to the minutes. “Many participants assessed that the Committee’s previous communications had been helpful in shifting market expectations in terms of policy perspectives towards better alignment with the Committee’s assessment and had contributed to the tightening of conditions. financial “.
The Fed has left room for new policy decisions to be informed of incoming data on the economy, which have recently been softened. However, he also stressed that his main goal remained to reduce inflation and that, as a result, a “restrictive policy position” may be needed.
“Participants agreed that the economic outlook was very uncertain and that policy decisions should depend on data and focus on returning inflation to the Committee’s 2% target while maintaining strong labor market conditions. “, notes the minutes. “At present, participants felt that it was important to move quickly to a more neutral monetary policy position. They also noted that a restrictive policy position could be appropriate depending on the evolution of the economic outlook and the risks to the prospects “.
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11:11 am ET: stocks rise gains, Nasdaq up 1%
These were the main movements of the markets from 11:11 am ET:
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S&P 500 (GSPC): + 23.35 (+ 0.59%) to 3,964.83
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Dow (^ DJI): +87.30 (+ 0.27%) to 32,015.92
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Nasdaq (IXIC): +110.02 (+ 0.98%) to 11,374.47
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Crude (CL = F): + $ 0.22 (+ 0.20%) to $ 109.99 a barrel
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Gold (GC = F): $ 17.20 (-0.92%) to $ 1,848.20 per ounce
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10-year Treasury (^ TNX): -0.9 bp for 2.7510% yield
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9:31 am ET: Shares open lower before losses are eliminated
These were the main movements of the markets from 9:31 am ET:
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S&P 500 (GSPC): -9.53 (-0.24%) at 3,931.95
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Dow (^ DJI): -114.27 (-0.36%) at 31,814.35
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Nasdaq (^ IXIC): -22.24 (-0.20%) at 11,242.21
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Crude (LC = F): + $ 0.89 (+ 0.81%) to $ 110.66 per barrel
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Gold (GC = F): $ 13.90 (-0.75%) to $ 1,851.50 per ounce
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10-year cash flow (^ TNX): -2.6 bp for a yield of 2.7340%
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9:12 am ET: Durable goods orders disappoint in April
U.S. durable goods orders slowed in April and revised downward in March, giving at least an early signal that companies could be reducing investment as economic uncertainties increase.
Orders for durable goods, or manufactured goods destined to last at least three years, rose 0.3% in April compared to March, the Commerce Department said on Wednesday. This was below the 0.6% consensus expected by economists, according to Bloomberg data. In March, durable goods orders rose 0.6%, with this revised rate down from the 1.1% previously reported.
Non-defense capital goods orders, excluding aircraft, also fell short of expectations, up 0.3% in April from 0.5% forecast. This metric rose 1.1% in March and serves as an indicator of business investment. However, shipments of non-defense capital goods, excluding aircraft, which account for GDP, rose 0.8% better than expected last month.
“The recent slowdown may be just a temporary reaction to rising energy prices; companies may be waiting to see how consumers respond,” wrote Ian Shepherdson, chief economist at Pantheon Macroeconomics. , in an email about the report. “So far, we don’t see any evidence of impact other than housing, but we also can’t rule out the idea that higher rates are directly causing some capex. [capital expenditures] that will be postponed, even though companies are sitting on large piles of cash accumulated during the pandemic. “
“At the moment, there seems to be a decent increase in capital expenditure on equipment in the second quarter, given the delays in the previous strength in orders, but the outlook for the second half has become a bit more bleak,” he added. .
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7:55 am ET: Dick’s Sporting Goods becomes the latest retailer to reduce year-round outlook given “evolving macroeconomic conditions”
Shares of Dick’s Sporting Goods plunged more than 14% Wednesday morning after the retailer became one of the last to cut year-round earnings and sales as economic uncertainty returned to arise.
The sporting goods retailer said it now sees adjusted earnings between $ 9.15 and $ 11.70 per share for fiscal year 2023, with that range well below $ 11.70 and $ 13.10 per share seen above. Comparable store sales are likely to fall by 2% to 8% this year, the company added, compared to previous unchanged sales forecasts and down 4%. Dick’s Sporting Goods said it updated its outlook “to reflect the impact of changing macroeconomic conditions,” according to its earnings statement Wednesday morning.
Following the launch, the stock was well on track to record a sixth consecutive day of losses, or its longest loss streak since early December 2021, as shares fell in sympathy with other large retailers during the week. past.
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7:23 am ET: Stock futures are down
This is where the markets traded on Wednesday morning:
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S&P 500 futures (ES = F): -5.25 points (-0.13%) to 3,935.25
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Dow futures (YM = F): -55 points (-0.17%) to 31,825.00
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Nasdaq futures (NQ = F): -9.5 points (-0.08%) to 11,761.50
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Crude (LC = F): + $ 1.47 (+ 1.34%) to $ 111.24
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Gold (GC = F): $ 14.10 (-0.76%) to $ 1,851.30 per ounce
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10-year Treasury (^ TNX): -2.6 bp for a yield of 2.734%
NEW YORK, NEW YORK – MAY 23: Traders work on the floor of the New York Stock Exchange (NYSE) on May 23, 2022 in New York City. After a …