Dow closes lower Wednesday to end 5-day win streak, Wall Street mulls new retail data

CNBC in 5 minutes: All the buy, sell and hold stock calls from Wednesday
CNBC in 5 minutes: All the buy, sell and hold stock calls from Wednesday

Stocks fell on Wednesday as the rally that has pushed prices higher since mid-June appeared to lose steam. Traders also assessed the latest retail data and minutes from the Federal Reserve.

The Dow Jones Industrial Average shed 171.69 points, or 0.5%, to close at 33,980.32. The S&P 500 slid 0.72% to close at 4,274.04, while the Nasdaq Composite tumbled 1.25% to 12,938.12.

The 30-stock index snapped its 5-day win streak but finished the session slightly positive week to date. The S&P 500 and Nasdaq have slipped 0.14% and 0.84%, respectively, since the start of the week.

Stocks were volatile as traders assessed the latest Fed meeting minutes, which showed that the central bank would continue its aggressive hiking campaign until it can tame inflation. At the same time, the Fed also indicated that it could soon slow the speed of its tightening, while also acknowledging the state of the economy and risk to the downside for gross domestic product growth.

"Participants judged that, as the stance of monetary policy tightened further, it likely would become appropriate at some point to slow the pace of policy rate increases while assessing the effects of cumulative policy adjustments on economic activity and inflation," the minutes said.

Meanwhile, traders continued to comb through corporate earnings from the retail sector. Target shares slipped 2.6% after posting earnings that widely missed expectations as it grapples with excess inventory. Lowe's ended the session marginally higher despite a mixed quarter. Retail sales data released Wednesday were flat in July, although consumers did increase spending online.

"No surprise to see the market take a breather from the summer rally it's been riding," said Chris Larkin, managing director of trading at E-Trade Financial. " … The market is looking for any sign that a slowdown in rate hikes, which has seemingly fueled the recent rise, is coming. Investors should remain nimble and continue to expect volatility as we may not be out the woods just yet."

Bond yields also rose, with the 10-year Treasury note up about 7 basis points at 2.9% as recessionary fears and uncertainty regarding the Fed's rate-hiking path persisted. The move dragged down growth stocks like tech.

Lea la cobertura del mercado de hoy en español aquí.

Dow slumps more than 170 points, stocks close lower

Stocks closed lower Wednesday, with the Dow Jones Industrial Average snapping its 5-day win streak.

The Dow slid 171.69 points, or 0.5%, to close at 33,980.32. The S&P 500 slipped 0.72% to 4,274.04, and the Nasdaq Composite shed 1.25% to 12,938.12.

Despite the move, the Dow ended the session positive for the week. The S&P 500 and Nasdaq sit in negative territory.

— Samantha Subin

Meme stock rally could signal broader market about to peak

Big moves in meme stocks can be a warning that the broader market is near a top.

The meme stock du jour has been Bed Bath & Beyond, up more than 29% Wednesday after a number of big moves this month.

"Typically when you get to the tail end of a rally, they go after the highly speculative meme type names," said Scott Redler, chief strategic officer at T3Live. "That usually gives us clues a peak is coming and that could have been yesterday."

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Redler was referring to the fact that the S&P 500 brushed against its 200-day moving average but did not break through that level and close there. That would have been considered bullish.

The 200-day was 4,324 on the S&P Wednesday. The S&P was at 4,275 in late trading.

"The meme frenzy is usually indicative of speculation and froth and the end of an active sequence. Up to the 200-day is a likely spot for the market to rest for the rest of the summer," Redler said.

— Patti Domm

Walmart's results bode well for dollar stores, Loop Capital says

Walmart's strong quarterly results could bode well for dollar stores that cater to a similar target market, Loop Capital says.

"We believe WMT's performance is a positive read through for Dollar General and Dollar Tree given the similar target customer bases, while the dollar stores are not weighed down by the inventory glut Walmart is," analyst Anthony Chukumba said in a note to clients Wednesday.

Chukumba believes that companies like Dollar Tree and Dollar General remain in a "sweet spot" as higher-income customers trade down from more expensive alternatives. At the same time, these names should benefit from spending power increasing for lower-income consumers with the decline in gas prices.

— Samantha Subin

Stocks off lows as market views Fed minutes as more moderate than expected

Stocks came well off their lows after the Federal Reserve's July meeting minutes were less hawkish than feared.

But strategists said the minutes were not as dovish as the market initially perceived them to be. The Dow had been down more than 300 points earlier Wednesday and briefly turned positive after the 2 p.m. ET minutes. The index was down about 75 points in late trading.

"Reading the minutes if you're on team pivot, there was enough in there to keep you satisfied," said Art Hogan, chief market strategist at National Securities. "But if you're on the team that believes the Fed has has along way to go, you're equally pleased. I think it boils down to we're data dependent."

Keith Lerner, co-CIO at Truist, said there was a comment that could be construed as dovish, but there were also equal amounts of concern from Fed officials about inflation. The minutes said Fed officials believed it would be appropriate at some point to slow the pace of rate hikes while assessing the impact on the economy and inflation.

"The market is moving, but it's kind of a light day in terms of news, and I don't think this is a big change or shift from what people were thinking before the report," Lerner said.

--Patti Domm

Progressive hits all-time high

Shares of insurance company Progressive hit an all-time high on Wednesday, trading as high as $127.43 per share, after the company said it earned nearly $700 million in net income in July.

Progressive said that its combined ratio was 89.8% in July, down from 96.7% a year ago. Combined ratio is a measure of profitability for insurance firms, and lower scores indicate better performance.

MKM Partners analyst Harry Fong said in a note that this represented "dramatic improvement."

"With underwriting well below its overall long- term goal of writing to a 96% combined ratio or better, it can easily turn up marketing initiatives to grow again. Its underwriting results in personal auto are by far better than any other insurers we've seen recently," Fong wrote.

Progressive is up more than 20% this year. Insurance stocks are often seen as a beneficiary of higher interest rates, which may be helping Progressive outperform.

Progressive was last up roughly 3.2% near $126.46 per share.

— Jesse Pound

Fed plans to hike rates to a 'restrictive' level, minutes show

The minutes from the Federal Reserve's July meeting shows that central bankers plan to continue rate hikes in order to bring down inflation.

"With inflation remaining well above the Committee's objective, participants judged that moving to a restrictive stance of policy was required to meet the Committee's legislative mandate to promote maximum employment and price stability," the minutes said.

The Fed has hiked by three quarters of a percentage point at each of its last two meetings. However, the central bank signaled that it could slow that pace in the coming months as those historically large moves take full effect.

"Participants judged that, as the stance of monetary policy tightened further, it likely would become appropriate at some point to slow the pace of policy rate increases while assessing the effects of cumulative policy adjustments on economic activity and inflation," the minutes said.

Some of the meeting participants indicated that the Fed should keep rates at a restrictive level "for some time" even after slowing the hikes.

The minutes also showed that Fed is worried about inflation and the economic environment possibly worsening from here.

"Uncertainty about the medium-term course of inflation remained high, and the balance of inflation risks remained skewed to the upside, with several participants highlighting the possibility of further supply shocks arising from commodity markets," the minutes said. "Participants saw the risks to the outlook for real GDP growth as primarily being to the downside."

— Jesse Pound

Apple shares rise, bucking the tech decline

Apple CEO Tim Cook walks during Apple's annual Worldwide Developers Conference in San Jose, California, June 6, 2022.
Peter Dasilva | Reuters

Shares of Apple rose Wednesday, bucking a broader decline in tech stocks, with the Nasdaq Composite the worst performing of the major averages. The tech-heavy index is down 1.2%.

The tech stock advanced 1.3% on Wednesday. Apple is down just 1% this year, outpacing other mega-cap tech stocks such as Amazon and Alphabet, which are down nearly 15% and 17% over the same time period.

It's also up nearly 28% in the current quarter, and roughly 4% off its all-time high.

Some investors expect that Apple will continue to fare better than its rivals during a period of rising interest rates and high inflation. Apple expects that iPhone sales will remain strong, even as slowing consumer demand hurts global smartphone sales.

The tech giant is expected to hold a September 7 launch event to unveil the iPhone 14, according to a Bloomberg report citing people familiar with the matter.

— Sarah Min

'Dr. Doom' Henry Kaufman says the Fed is failing in its fight against inflation

Influential investor Henry Kaufman believes the Federal Reserve is still behind the curve even as it raised interest rates aggressively this year.

In an interview with the Financial Times, the 94-year-old market veteran called on Chairman Jerome Powell to take bold action to combat surging prices.

"I am still waiting for him to act boldly — 'boldly' means he has to shock the market," Kaufman said of Powell. "If you want to change someone's view, if you want to change someone's action, you can't slap them on the hand, you have to hit them in the face."

The Fed enacted its second consecutive 0.75 percentage point rate increase last month, taking its benchmark rate to a range of 2.25%-2.5%. However, Kaufman said there's still a long way to go in the Fed's tightening cycle as inflation rate is still a lot higher than interest rates.

Kaufman made his name by predicting the market bottom on August 17, 1982, which marked the beginning of the longest bull market in history.

— Yun Li

Searching for stocks that reclaimed their long-term positive trend

Some stocks are reclaiming their long-term positive trend as markets rebound off their mid-June lows, according to a technical analysis from CNBC Pro.

Our stock screen surfaced 11 names that have climbed back above their 200-day moving averages, and also outperformed the rally in the broader market. What's more, they're expected to advance further from here.

Check out the stocks in our CNBC Pro screen.

— Sarah Min

July retail sales suggest 'no imminent recession,' Evercore ISI's Shipley says

Despite disappointingly flat retail sales data for July, there are some positive signs coming out of the report.

"This release suggests no imminent recession, but in aggregate should weigh down Treasury yields, the dollar and retail stocks," Evercore ISI's Stan Shipley said in a note to clients Wednesday.

While the data showed weakness in areas like auto sales, other sectors saw continued consumer spending. Some discretionary areas rose slightly while online sales rose 2.7%, a sign that consumers continue to spend even in the face of rising inflation.

"With a still strong labor market and gasoline prices easing, the all-important US consumer continues to spend, but big-ticket items such as automobiles are lagging," wrote Quincy Krosby, chief global strategist, at LPL Financial.

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—Carmen Reinicke

Bond yields sharply higher as market worries about inflation and fears Fed minutes will be hawkish

The benchmark 10-year Treasury yield was sharply higher Wednesday on concerns about inflation and a hawkish Federal Reserve.

Strategists say U.K. inflation data and strong U.S. retail sales were catalysts for yields, as investors worried the Fed could be more aggressive with its rate hiking.

"Particularly today, with the minutes looming, that's the concern," said Michael Schumacher of Wells Fargo. "The Fed minutes could be hawkish." The Fed releases minutes of its last meeting at 2 p.m. ET.

The 10-year was at 2.89% late Wednesday morning, up from 2.80% at the end of Tuesday's trading. The yield, which moves opposite price, was higher early in the day, on a report that U.K. inflation was running at 10.1%, a 40-year high.

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Then U.S. retail sales, released at 8:30 a.m. ET, pushed the yield even higher. On the headline, retail sales were flat for July, but excluding autos and gas, sales rose a higher-than-expected 0.7%.

The minutes are from the July 26 and 27 meeting, where the Federal Open Market Committee voted to raise the fed funds target rate by another three-quarters of a point.

The 2-year yield, which most reflects Fed policy, was at 3.33%, about 10 basis points from its intraday low.

--Patti Domm

Oil reverses losses, turns positive after inventory report

Oil prices moved higher after the latest inventory report, which showed a larger-than-expected draw. The Energy Information Administration said Wednesday that stockpiles in the prior week declined by 7.1 million barrels. Analysts had been expecting a draw of 250,000 barrels, according to estimates from FactSet.

West Texas Intermediate crude, the U.S. oil benchmark, added 50 cents to trade at $87.03 per barrel. Earlier in the session the contract fell to its lowest level in more than six months. International benchmark Brent crude was at $92.69 for a gain of 0.4%.

Natural gas retreated more than 1% to $9.21 per million British thermal units. The decline comes after a monster run for the commodity, which is up more than 30% in the last month and hovering around multi-year highs.

"Over the past few weeks the intense power burn coupled with very low injection into gas storage has led to a situation where domestic US gas supplies are very tight," said Campbell Faulkner, senior vice president and chief data analyst at OTC Global Holdings.

"Further, as the weather cools slackening power demand/gas burn, natural gas will still be diverted from storage into LNG trains for European and Asian exports," he added.

— Pippa Stevens

Analog Devices sinks 5% on bookings warning, chip stocks slide

Shares of Analog Devices fell more than 5% despite beating expectations in the recent quarter as the company warned that economic uncertainty could weigh on bookings.

Other chip stocks, including Nvidia, Advanced Micro Devices, Applied Materials and Micron sank more than 2% amid the news.

— Samantha Subin

Travel stocks slump, Carnival falls 5%

Travel stocks fell on Wednesday, dragging the S&P 500's consumer discretionary sector down nearly 2%.

Cruise stocks led the tumble, with shares of Carnival, Norwegian Cruise Line and Royal Caribbean down about 5% each. Hotel and casino stocks including Wynn Resorts, MGM Resorts and Marriott slid 3.8%, 2.5% and 2.1%, respectively.

— Samantha Subin

Tech shares slide

Tech shares slumped on Wednesday. Share of Alphabet and Tesla fell more than 1% each, while Netflix, Amazon and Meta Platforms slumped by more than 2%.

Several S&P 500 sectors also showed signs of weakness as tech shares slipped. Consumer discretionary, information technology and communications services each fell more than 1%. Materials also fell 1%, dragged down by names like Freeport-McMoRan and PPG Industries.

— Samantha Subin

S&P 500 failed first test of key chart level, could signal some near-term weakness

Traders on the floor of the NYSE, Aug. 16, 2022.
Source: NYSE

The S&P 500 fell back after testing its 200-day moving average Tuesday, signaling the index may have set a possible short-term top.

The S&P reached a high of 4,325 Tuesday, before backing off. The 200-day moving average was just a point above that level at the time, and it was at 4,324 in Wednesday trading. The S&P 500 was down 0.7% at 4,272 just before 10:30 a.m. ET.

"It's pretty typical of the first attempt at a 200-day," said BTIG's Jonathan Krinsky. "When a 200-day is declining and you're rallying from the underside, it's a pretty typical to fail the first time. That doesn't tell us much...The confirmation lower today is suggestive of further declines. We're due for a pullback. 4,177 to 4,200 is now key support."

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The 200-day is simply the average of the last 200 closes of a stock or an index. Traders watch it as a momentum indicator. A close above it can signal a move higher, and when an index breaks below it, it could be in for a more prolonged downtrend.

"Typically you get rejected there. If you were to get back there again, it has better success," said Scott Redler, partner with "It doesn't mean we have to get back there again. Within the last week, there's been a lot of meme-type trading, lots of things got overbought. It felt more forced than sustainable. At this point, there's a 70% chance yesterday's high is the August top."

But if the index should take another run at the 200-day and close above that level, traders would take it as a positive signal for the market.

— Patti Domm

Stocks open lower

Stocks opened lower on Wednesday as Wall Street combed through new retail data and looked ahead to the release of minutes from the Federal Reserve's recent meeting.

The Dow last traded 213 points, or 0.62%, lower. The S&P and Nasdaq fell 0.85% and 1.19%, respectively.

— Samantha Subin

Retail sales flat in July as falling prices hit gas station receipts

Retail sales were flat in July as falling fuel prices depressed gas station receipts and shoppers used the savings to spend in other areas.

The zero gain in monthly sales was slightly less than the 0.1% Dow Jones estimate, while ex-autos gain of 0.4% was better than the flat expectation.

Gas station sales fell 1.8% for the month, though they rose just shy of 40% for the year. Online sales increased 2.7% while bar and restaurant sales rose just 0.1%.

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