Spencer Platt
U.S. stocks on Wednesday held onto marginal gains after Federal Reserve chair Jerome Powell at an event said that recent economic data did not “materially change” the Fed’s overall outlook and reiterated that the central bank was still looking for more confidence that inflation was coming down.
The three major averages had earlier overcome a negative open to move higher, after a report showed a slowdown in services activity and offset earlier data reinforcing the labor market’s resilience.
With Powell delivering prepared remarks at an event in Stanford, Calif., the tech-heavy Nasdaq Composite (COMP:IND) was up 0.30% to 16,289.07 points in mid-day trade. The benchmark S&P 500 (SP500) had climbed 0.21% to 5,217.00 pints, while the blue-chip Dow (DJI) was marginally higher by 0.04% to 39,184.88 points.
Of the 11 S&P sectors, eight were in the green.
The S&P (SP500) in on a two-day losing streak, as Wall Street has endured a bumpy start to the fledgling second quarter of 2024. Data has shown that inflation remains sticky and growth stubborn even in the face of elevated interest rates. Market participants still expect rate cuts from the Federal Reserve, but have dialed back the odds of a 25 basis point cut at the central bank’s June monetary policy meeting.
On Wednesday, stock index futures took a hit before the opening bell after data showed more resilience in the labor market. As per ADP’s monthly report, the U.S. added 184K private sector jobs in March, higher than the 150K expected and accelerating from February’s rise of 155K.
Shortly after the start of regular trading, equities moved sharply higher following the release of the Institute for Supply Management’s gauge of economic activity in the services sector. The headline services PMI moderated to 51.4 percent in March from 52.6 percent in February. Meanwhile, the prices index reflected its lowest reading since March 2020, pointing to a stabilization in prices.
“Cooling off of services inflation? In March, the ISM services prices index eased to 53.4, the lowest since the onset of the COVID-19 pandemic. Supply chains have shown improvement too with supplier delivery times improving to their best since April 2009,” Renaissance Macro Research said on X (formerly Twitter).
Looking at the fixed-income markets, Treasury yields were up on Wednesday, with longer-end maturities hitting their highest levels of the year. The 30-year (US30Y) and 10-year yields (US10Y) were both up 3 basis points each to 4.53% and 4.38%, respectively. The shorter-end more rate-sensitive 2-year yield (US2Y) was little changed at 4.71%.
See live data on how Treasury yields are doing across the curve at the Seeking Alpha bond page.
“Another leg up in yields this morning with the US 10-year (US10Y) currently trading above 4.40% — this as Brent oil approaches $90. Friday’s U.S. jobs report will thus be even more influential for what happens next to the evolution of the consensus market views on U.S. growth and Federal Reserve policy,” Mohamed El-Erian, chief economic advisor at Allianz, said on X.
Turning to active stocks, Ulta Beauty (ULTA) slumped about 13% and was the top percentage loser on the S&P 500 (SP500), after the beauty retailer’s management warned of a slowdown in demand in the current quarter. The comments also dragged down rivals such as Estee Lauder (EL) and Coty (COTY).
Intel (INTC) slid nearly 7% after the chip giant disclosed a wider annual loss for its foundry business on lower Y/Y revenue. The company expects the business to breakeven by roughly 2027.
Walt Disney (DIS) stock is in focus, ahead of a pivotal shareholder vote that will determine the company’s 13-member board. The media and entertainment giant is locked in a proxy fight with activist investor Nelson Peltz and his Trian Fund and Blackwells Capital.
