The stock market remained skittish at midday Wednesday, with hours to go before the Fed announces its next rate decision. The IBD 50 outperformed as several stocks broke out or otherwise acted well.
Shortly before noon on Wall Street, the Dow Jones Industrial Average was down 0.8%, worse than the S&P 500's 0.3% loss. The Nasdaq composite and small-cap Russell 2000 fell 0.2%.
Volume rose on the NYSE and Nasdaq compared with the same time on Tuesday.
The Innovator IBD 50 ETF gave up an early gain, dropping 0.3% despite good moves in several stocks.
Silicon Labs — which gapped up 15% on a strong Q4 — accounted for much of the ETF's solid performance. Nexstar Media Group rose above its 204.72 buy point but in light volume.
Also, Old Dominion Freight Line gapped up more than 9% to a new high in heavy volume. The first of several trucking companies to post quarterly results, Old Dominion beat profit estimates and raised its dividend. However, revenue came just short of expectations.
Also helping the IBD 50, China-play Pinduoduo added 6.7% and Lattice Semiconductor regained the 76.57 buy point of a cup base.
Fed Speculation Dominates Stock Market
The Federal Reserve releases its policy statement at 2 p.m. ET. Chair Jerome Powell will follow with a 2:30 p.m. news conference.
Traders expect the Fed to raises rates by one-quarter point. Investors will also be watching for indications of how many more rate hikes the Fed has in mind. In short, expect indexes to be volatile after the announcement. Already, indexes have wavered.
In a sign the labor market is cooling, January ADP employment data reported private employment increased by 106,000 jobs, down from a revised 253,000 last month. Economists had forecast 158,000 jobs.
The final S&P Global U.S. manufacturing PMI index showed continued slowing in January. The index rose to 46.9 in January, from 46.2 in December. Readings below 50 show contraction.
The Job Openings and Labor Turnover Survey (JOLTS) showed a still-tight labor market. More than 11 million job openings marked an increase of 572,000 from the previous month, higher than economists expected.
"U.S. manufacturing production continues to rapidly lose steam, falling deeper into contractionary terrain," said BMO Capital Markets Senior Economist Priscilla Thiagamoorthy. "Meanwhile, labor market conditions remain tight, bolstering expectations that rates will stay restrictive for some time."
She added that Powell will likely point to the tight job market and subsequent wage gains to justify at least one more rate hike.
The 10-year Treasury yield fell 4 basis points to 3.49%.
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Stock Market And Earnings
Despite the risk of a sell-off on the Fed news, the stock market has been resilient. The Nasdaq ended January with a gain of more than 10%, the best start since 2001, while the S&P 500 rose about 6%.
A number of financial, technology and other stocks have disappointed with Q4 results but that hasn't stopped the stock market. In fact, investors are looking past poor results.
FactSet says companies that beat expectations are rising an average 1.5% in the four-day period straddling their earnings reports. That's above the five-year average of a 0.9% increase.
Even companies that missed earnings are up an average 0.7% two days before and after the release. That's well above the five-year average, which sees stocks fall 2.2% when they miss views.
Of course, earnings reports are another sensitive point for the stock market.
Humana was down a fraction amid two-sided action after a mixed fourth-quarter report. The stock is forming a cup base but met resistance at the 50-day moving average.
Electronic Arts Postpones Star Wars Game
Electronic Arts plummeted 12% after its December-quarter report. Earnings topped the consensus estimate but adjusted sales missed expectations. More importantly, EA plans to delay its Star Wars game release and will shut down development of two games.
Dynatrace rallied more than 12% in heavy trading, gapping above the 41.25 buy point of a flat base. The automation software company topped sales and profit expectations, according to FactSet.
Advanced Micro Devices jumped 7.5% on a better-than-expected fourth-quarter report. The stock edged back above the 200-day moving average for the first time since March of last year. The chipmaker forecast Q1 sales of $5.3 billion, down 10% year over year and below views.
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Brinker International reversed sharply lower and is testing the 21-day exponential moving average. The restaurant chain beat profit expectations and raised guidance for the current quarter.
Snap slid 14% in big volume, giving back four days of encouraging gains. The parent of the Snapchat social app reported a 36% drop on Q4 earnings and warned that current-quarter sales are likely to fall.
