The stock market rose moderately as all eyes were focused on the Fed meeting, which is widely expected to end with a half-point interest rate hike. Delta Air Lines rose on updated guidance while Tesla dropped to new 52-week lows.
The Nasdaq composite rose 0.6% while the S&P 500 gained 0.7% by early afternoon. The Dow Jones Industrial Average rose 0.7%. The small-cap Russell 2000 index rose 0.6%.
Volume fell on the NYSE and the Nasdaq vs. the same time on Tuesday.
The yield on the benchmark 10-year Treasury note fell 12 basis points to 3.49%. Crude oil prices rose 2.8% to $77.48 per barrel.
The Innovator IBD 50 ETF gained 0.4%, led higher by solar stock Shoals Technologies and fast-food chain Wingstop.
All 11 S&P sectors rose Wednesday with the exception of the S&P Energy Select Sector ETF, which fell 0.3%.
Stock Market Gains As All Eyes Are On Fed Chairman
The Fed's two-day policy meeting concludes today, with an interest rate decision due out at 2 p.m. ET, followed by comments from Chairman Jerome Powell at 2:30 p.m.
The Fed has signaled that it will step down the pace of rate hikes starting with this meeting, with widespread expectations of a half-point rate hike to a range of 4.25% to 4.5%. Yet there's good reason to doubt that Powell will be swayed by the tamer readings for the consumer price index and core CPI inflation. In fact, Powell gave a speech on Nov. 30 explaining why those are wrong inflation rates for the Fed to consider.
Investors will also be carefully watching Powell's comments and any signals that the Fed could be shifting its stance on policy.
"We look for a 50 basis point increase in the federal funds rate and expect the Fed chairman to remain steadfast in his battle against inflation," said John Lynch, chief investment officer for Comerica Wealth Management. "Though yesterday's CPI report was encouraging, we believe the market has overreacted to an easing of inflationary pressures."
The probability the Fed will raise rates by 0.5% today is pegged at 79.4%, while odds for a 75-basis-point hike are 20.6%, according to the CME FedWatch tool.
In Europe, stocks fell after inflation fell slightly in the U.K. Consumer prices in the U.K. were 10.7% higher than a year earlier, a slower rate of inflation than the 11.1% annual rate in October, the Office for National Statistics said Wednesday.
In London the FTSE 100 fell 0.1%, the German DAX dipped 0.3% and the French CAC 40 fell 0.3%.
Delta Gains On Upgraded Q4 Forecasts, Guidance
Delta Air Lines gained more than 3% after the airline raised its Q4 outlook and issued 2023 guidance.
Delta cited strong demand for air travel for the holidays, easing concerns about a travel slowdown. The Atlanta-based airline also said Wednesday that its adjusted per-share earnings could nearly double in 2023.
DAL shares are trading just above their 50-day moving average while it waits to build a base.
RV and specialty vehicle maker REV Group rallied more than 18% after reporting earnings and sales that beat Wall Street estimates. The stock found support around the 50-day line.
Stock Market Today: RNA, KYMR, BBY, TSLA
Avidity Biosciences shot up more than 60% after announcing the preliminary results of a drug trial. The company said its experimental RNA therapy, when injected into the muscle, has potential as a treatment for myotonic dystrophy type 1, a sometimes fatal neuromuscular disease.
Kymera Therapeutics gained 15% after announcing results from a clinical trial. Kymera unveiled promising results for its skin-disease treatment early Wednesday. The company said it tested the drug in patients with skin diseases and that most patients had "substantial responses."
Best Buy was down more than 2.5% after Bank of America downgraded shares to underperform from neutral and cut the price target to 69 from 80.
Tesla edged down as much as 1.7% after Goldman Sachs analyst Mark Delaney lowered the firm's price target on the stock to 235 from 305 but kept a buy rating. Tesla shares hit a fresh 52-week low.
Chevron and Exxon Mobil both fell moderately, even as the price of oil rose.
Earnings reports this week include homebuilder Lennar and desktop software maker Adobe on Thursday and Darden Restaurants on Friday.
Follow Michael Molinski on Twitter @IMmolinski
