The stock market was modestly higher Wednesday at midday as it prepared for what could be the final interest-rate increase in the Fed's headlong campaign to bring down inflation. Meantime, economic data showed strength, and earnings reports drove big moves.
The Nasdaq whittled down its gain to 0.2% at midday, while the S&P 500 was up a fraction. The Dow Jones Industrial Average was down 0.1%. But small caps led, with the Russell 2000 up 0.9%.
Volume fell on the NYSE and Nasdaq compared with the same time on Tuesday.
The Innovator IBD 50 ETF rose 0.6%. IBD 50 stock Uber Technologies rose above the 37.68 buy point of a cup base in heavy volume. Morgan Stanley, Deutsche Bank and others raised their price targets on Uber Wednesday.
Also in the IBD 50, water products and services company Core & Main also rose above a buy point from a cup base, albeit in light volume. But Trane Technologies slid below its 187.10 buy point and Clean Harbors broke below the 50-day moving average in heavy volume. Both reported Q1 earnings today.
While indexes remain in a trading range, they've also become more volatile in the past several days. That suggests growing uncertainty among investors.
The stock market could get some clarity with this afternoon's Fed policy statement. While a rate hike is almost a certainty, investors are more interested to learn the outlook for interest rates.
Earnings In Today's Stock Market
Almost a side show with today's focus on the Fed, earnings news continued to cause big moves among stocks.
Advanced Micro Devices plunged more than 7%. Late Tuesday, the chipmaker beat Q1 expectations but its sales forecast for the current quarter missed estimates.
Super Micro Computer, also an IBD 50 stock, leapt 24% on a bullish outlook. The tech hardware maker missed lowered targets for its March-ended quarter late Tuesday. But the company gave guidance for the current quarter much better than analysts expected. Shares are extended after finding support at the 10-week moving average.
Restaurant and food stocks were mainly lower after a batch of Q1 reports.
Starbucks gapped down and the stock finds itself below the 110.93 buy point of last week's breakout. So far there's no sell signal. The coffeehouse chain slid despite better-than-expected quarterly results. Starbucks is having its worst day since June 11, 2020, when it fell 8.2%, according to Dow Jones Market Data.
Yum Brands fell nearly 4% in active trading and remains in the buy zone of a 133.87 buy point. The parent of Pizza Hut, Taco Bell and KFC missed profit expectations, according to FactSet.
Brinker, which owns Chili's and Maggiano's, was down 10% but pared most losses at midday after beating Q1 estimates.
Wingstop regained its opening gains at midday and is now extended from a 193.84 buy point. The company's Q1 results also beat views.
Dine Brands, the parent company of IHOP and Applebee's, jumped 5.5% after beating Q1 expectations.
Food, Building Companies Beat Views
Kraft Heinz gapped up more than 4% as it continues to form a cup base with a 42.90 buy point. The maker of condiments and many other food products topped Q1 estimates as higher prices offset lower sales volumes.
Builders FirstSource gapped above the 97.01 buy point of an ascending base in heavy trading. The supplier of products for the homebuilding industry nailed first-quarter sales and profit expectations this morning.
With the homebuilding industry enjoying a revival, many building products stocks have been rising in sympathy. Eagle Materials also broke out Wednesday, topping a 152.25 entry.
In one of the worst sell-offs in today's trading, Estee Lauder plummeted 17% to a six-month low. The cosmetics company cut its forecast for the fiscal year ending next month due to an uncertain post-pandemic recovery in Asia. It's Estee Lauder's worst day since November 1995.
In health care, Eli Lilly jumped after the drugmaker said its experimental Alzheimer's treatment significantly slowed cognitive decline in early stages of the disease. Lilly shares added more than 5% to notch a record high in heavy volume. The stock is extended from its 375.35 buy point.
Most Traders Expect Final Rate Hike Today
Most traders expect the Federal Reserve to increase the fed funds rate by a quarter point, to a range of 5%-5.25%. But odds for additional rate hikes are starting to disappear, according to CME Group's FedWatch.
For the next Fed meeting in June, odds for another rate increase are only 9%, with 75% odds of no change in rates. Expectations of a rate cut are building for later meetings this year.
Wednesday's economic data was not exactly supportive of a pause in rate hikes.
The ADP employment report showed 296,000 jobs gained in April, well above the consensus forecast of 143,000. It was also much higher than the previous month's increase of 142,000 positions. A resilient job market has been one reason the Fed has been able to keep tightening.
The ISM services purchasing managers' index rose 0.7 points to 51.9 in April, snapping a two-month skid and still in an expansion level. The latest numbers also were above forecasts.
"On the inflation front, the prices paid sub-index inched up to 59.6 — not what the Fed wants to see as it battles against stubbornly high services inflation," BMO Capital Markets Senior Economist Priscilla Thiagamoorthy wrote in an analysis.
