Wall Street had a relatively bearish trading session with the S&P 500 ending the trading session lower on Wednesday, taking an abrupt nosedive that reversed earlier solid gains. The reversal came after the Federal Open Markets Committee (FOMC) meeting which saw the U.S. Federal Reserve release its statement at the conclusion of its two-day policy meeting.
All three major U.S. stock indexes had a significant level of volatility towards the end of the session that ended with the Dow joining the S&P 500 in negative territory. However, the NASDAQ on the other hand, closed the trading session on the green but marginally.
The indexes enjoyed a brief surge after the Federal Open Markets Committee left key interest rates near zero. But those gains quickly evaporated as the Fed statement warned it would soon begin raising the Fed Funds target rate to combat persistent inflation related to the COVID-hobbled supply chain.
What you should know
- The Dow Jones Industrial Average decline 0.38%, to stand at 34,168.09 basis points, the S&P 500 lost 0.15%, to end the session at 4,349.93 basis points and the Nasdaq Composite marginally gained 0.02%, to stand at 13,542.12 basis points.
- The statement from the fed reads, “With inflation well above 2 percent and a strong labor market, the Committee expects it will soon be appropriate to raise the target range for the federal funds rate.”
- Stocks immediately slid into negative territory once Fed Chairman Jerome Powell’s subsequent Q&A got under way, during which he warned that inflation remains above its long-run goal and supply problems are bigger and more long-lasting than previously thought.
- Chris Zaccarelli, chief investment officer at Independent Advisor Alliance in Charlotte stated, “When reporters asked Powell if the Fed would consider raising rates at every meeting, which would mean more than four times this year, he didn’t say they wouldn’t, which indicates a flexibility to raise rates much more quickly (if necessary) than anyone was expecting.”
- Fourth-quarter reporting season has hit full stride, with one-fifth of the companies in the S&P 500 having posted results. according to Refinitiv data, of those released, 81% have beaten consensus.
- Microsoft gained 2.8% after current-quarter revenue guidance, driven in part by its cloud business, came in above consensus. Boeing was down 4.8% after the planemaker said it incurred $4.5 billion in charges in the fourth quarter related to its sidelined 787.
- Toymaker Mattel Inc jumped 4.3% after regaining the right from rival Hasbro Inc to produce toys based on Walt Disney’s “Frozen” franchise.
- Shares of top EVM Tesla dropped by approximately 5% in extended trade after the electric vehicle maker warned that its factories would run below capacity through 2022 due to supply-chain limitations.
While all 11 major sectors of the S&P 500 spent much of the trading day green, by the time the dust settled only tech and financials showed gains.
The S&P 500 posted 12 new 52-week highs and 9 new lows; the Nasdaq Composite recorded 28 new highs and 206 new lows. Volume on U.S. exchanges was 14.50 billion shares, compared with the 11.58 billion average over the last 20 trading days.
