The stock market was volatile after the Fed made an expected 25-basis-point rate hike on Tuesday afternoon, and indexes saw bigger moves when Chair Jerome Powell delivered prepared remarks. word.
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The Dow Jones Industrial Average was flat and the S&P 500 rose 0.8% after the Fed announcement. The Nasdaq rose 1.5% while the small-cap Russell 2000 declined 0.5%. Indices returned higher after Powell gave initial comments.
Volumes for the NYSE and Nasdaq were higher compared to the same time on Tuesday.
The Dow held above its 50-day and 21-day exponential moving averages, while the S&P 500 traded above its 200-day moving average. The Nasdaq found support at its 200-day line.
The tech-heavy Nasdaq 100-tracking Invesco QQQ Trust ETF (QQQ) added 0.1%.
Crude oil fell 3.1% to $76.43 per barrel. The Energy Select Sector SPDR (XLE) ETF shaved 2.6%.
The 10-year Treasury note yield fell 4 basis points to 3.47%.
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Fed Raises Rate by 25 Basis Points, No Surprise There
The Fed announced that it raised rates by a quarter of a percent, as expected. The move puts the fed funds rate in a 4.5%-4.75% range. The 25-basis-point move is smaller than the half-point increase in December and the four consecutive 75-basis point increases in 2022.
Members acknowledged the improvement in inflation numbers, but that did not change their guidance in a statement released after the meeting.
“The committee expects that continued increases” in interest rates “will be necessary to achieve a monetary policy stance that is sufficiently tight,” the statement said, using the same language included in the statements in policy since March.
Markets expect a 25-basis point increase in March, taking the fed funds rate to 4.75%-5%, then breathing to check. The March move would put the rate close to the Fed’s target rate of 5%-5.25%, where they feel they can relax to allow the economy to absorb the moves.
But officials also said they would base their decisions on how the economy performs in the coming months.
Powell reiterated that inflation remains too high for comfort and that bringing it down will take time.
Labor Market Gets Mixed Signals
The January ADP employment report showed that private payrolls increased by only 106,000 compared to the 158,000 consensus, and lower than December’s solidly revised 253,000 jobs. The increase was the smallest in two years, according to the Commonwealth Financial Network. The decline can be attributed to factors including seasonal layoffs and weather-affected jobs.
On the other hand, the December Job Openings and Labor Turnover (JOLTS) report came in at 11.012 million against the 10.2 million consensus.
The ISM manufacturing Index was 47.4 versus 48.0 expected, and a drop from December’s 48.4. The decline reflects further deterioration in the manufacturing sector. The index compiles and measures new orders, production, employment, supplier deliveries, and inventories from about 300 US manufacturers.
Stock Market: AMD Pops, Snap Plunges
Semiconductor company Advanced Micro Devices (AMD) rose 9.5% on heavy volume, after reporting better-than-expected Q4 EPS and sales numbers Tuesday after the market closed. The jump sent the stock to its 200-day line, where support was found. AMD is the leader of the S&P 500 today.
Electronic Arts (EA) fell 11.7% after reporting a miss on December-quarter EPS but a beat on sales. The video game publisher has announced that it will delay the Star Wars game and stop development on two mobile games. The plunge sent the stock below its 50-day and 200-day lines.
Electrical products company Atkore (ATKR) rose 12.2% after reporting a beat on its fiscal Q1 top and bottom lines. Shares broke a flat base with a 128.46 buy point.
Western Digital (WDC) returned 3.7% after reporting a miss on December-quarter earnings but a beat on sales. It also provided lower-than-expected Q3 revenue guidance. The drop sent shares below the 200-day moving average. The data storage device maker was a big loser in the S&P 500 today.
Snapchat’s parent company, Snap (SNAP), fell 12.7% after reporting a 36% drop in Q4 earnings and warned that sales in the current quarter are likely to fall.
Stock Market Movers: Fitness Stock Jumps
Medical device manufacturer Stryker (SYK) exploded 6.9% on heavy volume after reporting better-than-expected Q4 adjusted EPS and sales late Tuesday.
Platoon (PTON) rose 22% in heavy volume in its mixed fiscal Q2 2023 earnings report, and higher subscribers for the quarter. The interactive fitness equipment company provided comments.
Follow Kimberley Koenig for more stock news on Twitter @IBD_KKoenig.
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