The Dow Jones Industrial Average plunged over 500 points to close a volatile day as the market reacted to Fed Chair Jerome Powell 75 bps rate hike at 2 pm ET. The blue chip index rose 1% immediately after the news but fell sharply to close the day below by 1.5%
The S&P 500 also reversed. After opening 0.2% lower, the broad index was positive briefly by 0.5% before sinking 2.50%. The Nasdaq also pared back losses to show a gain of nearly 0.5% and then reversed to fall over 3%.
The small-cap Russell 2000 continued to lag and ended 3% lower as well.
Volume on the NYSE and the Nasdaq was higher compared to the same time on Tuesday.
The yield on the benchmark 10-year Treasury note notched up to 4.05%. Crude oil was at $89.87 a barrel.
The 75 bps hike bring interest rates to its highest since 2007 at 3.75% - 4%. The policy statement observed that future increases "will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation and economic and financial developments." The Fed also remain committed to a path that is sufficiently restrictive to bring inflation to the target 2%.
Hopes of a 50-basis-point hike were marred after the strong ADP jobs report today that showed private jobs increased by 239,000. Powell remarked that wage-price spiral is not the driving cause for inflation. According to Chief Economist at Comerica, Bill Adams, with winter's energy demand coming in, the outlook is dimmer for a real pivot when the rate hike cycle stops rather than just moderate.
Dow Jones leaders Apple and Microsoft extended declines in today's action. Health care stocks UnitedHealth Group and Merck which were holding gains earlier also fell.
Stocks Moving After Earnings Outside Dow Jones
Advanced Micro Devices fell nearly 2% after earnings. CVS Health rose 2% while Yum Brands also declined. Estee Lauder and Paramount gapped down 8% and 11%, respectively. Airbnbhas also fallen 13% after the earnings report.
AMD missed lowered expectations. CVS raised its outlook after a strong quarter, with revenue of $81.16 billion and per-share earnings of $2.09. YUM had $1.64 billion from fast food sales and earnings of $1.09 a share.
Sales declined 11% for Estee Lauder to $3.93 billion with earnings of $1.35 a share. Paramount declared $6.9 billion in sales and earnings of 39 cents a share. Airbnb's strong sales of $2.9 billion with earnings of $1.79 a share are not helping the stock today after the company lowered its outlook for holiday bookings.
Super Micro Computer bucked the broader trend and surged over 12% on strong volume today after a strong third quarter sales of $1.85 billion and earnings of $3.35 a share. This was a breakout action from a cup base for the stock. Shares are extended, however.
Stocks On Watch
Top-ranked Diamondback Energy is in a cup base with a buy point of 162.34 ahead of earnings on Tuesday. It has fallen slightly along with Dow Jones energy stock Chevron and Exxon Mobil today. This could possibly lead to a handle and lower entry point.
Wesco is also in a cup base with a buy point of 147.15. Earnings are due tomorrow. FANG and WCC are on the IBD 50. B.J.'s Wholesale is also a stock to watch as it nears a buy point 79.79 in a cup base. Earnings are due Nov. 17.
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