The stock market weakened in the final hour of trading, with the major indexes all posting losses and closing at the lows of the day. Investors were disheartened following the Federal Reserve's announcement today and Fed Chair Jerome Powell's press conference.
The Fed unanimously left rates unchanged as expected at 5.25-5.5%, but indicated one more rate hike by the end of the year to try to thwart inflation. The Fed's estimate by senior officials showed on the "dot plot" for fed funds rate closing the year at 5.6% with two rate cuts in 2024, to end next year at 5.1%.
The CME FedWatch tool shows a 71% chance that the Fed will stand pat at the November meeting. The current target rate is 5.25%-5.5%.
The FOMC statement said the economy has expanded at a "solid pace" and that jobs gains have slowed but remains strong, while unemployment remains low.
GDP was predicted to rise 2.1% this year and 1.5% in 2024. Personal Consumption Expenditures (PCE) core inflation is expected to drag to 3.7% this year and slow to 2.6% in 2024.
The benchmark 10-year Treasury yield shed 2 basis points to 4.35%.
The Nasdaq worsened its losses and tumbled 1.5% in afternoon stock market action.
The Dow Jones Industrial Average reversed course and closed down 0.2% and the S&P 500 skidded 0.9%. All three major indexes remain below their 50-day moving averages. The small-cap Russell 2000 fell 0.9% and slid further below its 200-day moving average.
Volume fell on the NYSE and rose on the Nasdaq vs. the same time on Tuesday, in preliminary numbers.
The Nasdaq 100-tracking Invesco QQQ Trust ETF increased its losses to 1.4%. The Innovator IBD 50 ETF sold off 1.3%.
Stock Market Action
Pinterest rallied 3.1% in heavy, volatile trade after the company, at its first investor day, announced it raised its revenue growth rate for the next three to five years to the mid- to high teens. PINS also announced a stock buyback of up to $1 billion of common stock. The news prompted several analysts to upgrade and raise price targets on the visual idea and inspiration app stock. The stock straddled its 50-day line, ending back below it again.
Coty stock gapped up 4.5% in heavy volume after the beauty and fragrance company raised its full-year fiscal 2024 like-for-like sales growth expectations to 8% to 10% from its previous guidance of 6% to 8%. The stock retook its 50-day line on the move. Shares are in a consolidation with a 13.46 buy point.
Shares of nCino repaired larger losses, to close down 3.1% in heavy volume, after Morgan Stanley downgraded the cloud-based financial services stock to underweight from equal weight with a price target of $24. The stock bounced off its 50-day line.
General Mills stock gave back early morning gains and closed relatively unchanged after the packaged foods company reported slightly better-than-expected fiscal first-quarter earnings and sales. The company also reaffirmed its fiscal 2024 guidance for adjusted earnings to increase 4%-6% and organic net sales to rise 3%-4%.
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Other Stock Movers
Cloud computing stock Akamai Technologies climbed 1.8% to hit the 107.47 buy point of a flat base Wednesday and is in the 5% buy zone, according to MarketSmith pattern recognition. Volume was tracking sharply higher than the daily average on the move, which is a positive sign. Its relative strength line hit a 52-week high as shown by the blue dot on the IBD MarketSmith daily and weekly charts.
Boston Scientific gained 2% after Needham reiterated its buy rating and 61 price target on the medical device stock.
Discount retail stock Dollar General reversed course from earlier losses and gained 0.5% in heavy trading, after JP Morgan downgraded the stock to underweight from neutral and lowered its price target to 116 from 132.
Dow Jones component IBM climbed 2.3% in heavy volume after RBC Capital initialed coverage on the stock. Shares are in the 5% buy zone reaching to 153.83 of a saucer-with-handle base with a 146.50 buy point. IBM stock is the biggest gainer on the Dow today.
Follow Kimberley Koenig for more stock market news on X, the platform formerly known as Twitter, @IBD_KKoenig.
