The stock market was volatile after the Fed made its expected 25-basis-point rate hike Tuesday afternoon, and indexes saw larger moves when Chair Jerome Powell gave prepared remarks.
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The Dow Jones Industrial Average was flat and the S&P 500 climbed 0.8% after the Fed announcement. The Nasdaq rose 1.5% while the small-cap Russell 2000 was down 0.5%. Indexes reversed higher after Powell gave initial comments.
Volume for both the NYSE and Nasdaq was higher vs. 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 shed 3.1% to $76.43 per barrel. The Energy Select Sector SPDR (XLE) ETF shaved off 2.6%.
The 10-year Treasury note yield shed 4 basis points to 3.47%.
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Fed Raises Rates 25 Basis Points, No Surprise There
The Fed announced it is raising rates by one quarter of a percent, as expected. The move put the fed funds rate at a 4.5%-4.75% range. The 25-basis-point move is smaller than the half-point increase in December and the four straight 75-basis point increases in 2022.
Members acknowledged improving inflation numbers, but that didn’t change their guidance significantly in a statement released after the meeting.
“The committee anticipates that ongoing increases” in interest rates “will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive,” said the statement, using the same language included in policy statements since last March.
Markets anticipate another 25-basis point hike in March, taking the fed fund rate to 4.75%-5%, then taking a breather to evaluate. The March move would put the rate near the Fed’s targeted 5%-5.25% rate, where they feel they can take a break to let the economy 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 considerable more time.
Labor Market Gets Mixed Signals
The January ADP employment report showed private payrolls increased only 106,000 vs. the 158,000 consensus, and considerably lower than December’s robust revised 253,000 jobs. The increase is the smallest in two years, according to Commonwealth Financial Network. The drop 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 vs. the 10.2 million consensus.
The ISM manufacturing Index was 47.4 vs. the 48.0 expected, and a drop from December’s 48.4. The drop shows further deterioration in the manufacturing sector. The index compiles and measures new orders, production, employment, supplier deliveries, and inventories from around 300 U.S. manufacturers.
Stock Market: AMD Pops, Snap Plunges
Semiconductor company Advanced Micro Devices (AMD) gapped up 9.5% in heavy volume, after reporting better-than expected Q4 EPS and sales numbers Tuesday after the market closed. The jump sent the stock over its 200-day line, where it found support. AMD is the S&P 500 leader today.
Electronic Arts (EA) plummeted over 11.7% after reporting a miss on December-quarter EPS but a beat on sales. The video game publisher announced it will delay its Star Wars game and stop development of two mobile games. The plunge sent the stock below its 50-day and 200-day lines.
Electrical products company Atkore (ATKR) gapped up 12.2% after reporting a beat on its fiscal Q1 top and bottom lines. Shares blew past a flat base with 128.46 buy point.
Western Digital (WDC) pulled back 3.7% after reporting a miss on December-quarter earnings but a beat on sales. It also gave lower-than-expected Q3 revenue guidance. The drop sent shares below the 200-day moving average. The data storage device manufacturer is an S&P 500 big loser today.
The parent company of Snapchat, Snap (SNAP), plunged 12.7% after reporting a 36% drop on Q4 earnings and warned that current-quarter sales are likely to fall.
Stock Market Movers: Fitness Stock Jumps
Medical equipment maker Stryker (SYK) popped 6.9% in heavy volume after reporting better-than-expected Q4 adjusted EPS and sales late Tuesday.
Peloton (PTON) spiked over 22% in heavy volume on a mixed fiscal Q2 2023 earnings report, and higher subscribers for the quarter. The interactive fitness equipment company gave upbeat comments.
Follow Kimberley Koenig for more stock news on Twitter @IBD_KKoenig.
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