S&P 500 ends 3-day losing streak. Dow jumps 700 points after Powell signals smaller rate hikes

Pro Picks: Watch all of Wednesday's big stock calls on CNBC
Pro Picks: Watch all of Wednesday's big stock calls on CNBC

Stocks saw broad gains Wednesday after Federal Reserve Chair Jerome Powell confirmed that the central bank will slow the pace of its aggressive rate-hiking campaign that has weighed on markets.

The Dow Jones Industrial Average closed up 737.24 points, or 2.18%, to 34,589.77. Meanwhile, the tech-heavy Nasdaq Composite jumped 4.41% to 11,468.00. The S&P 500 added 3.09% to 4,080.11.

"It makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down," Powell said in a speech at the Brookings Institution in Washington, D.C. "The time for moderating the pace of rate increases may come as soon as the December meeting."

Powell cautioned the Fed may stay with restrictive policy for a long time before it ends its inflation fight.

"Despite some promising developments, we have a long way to go in restoring price stability," Powell said.

Powell's comments bolstered growing optimism among some investors that the Fed will deliver a smaller, half percentage point rate hike at its next meeting on Dec. 14 after four straight increases of three quarters of a point to tame high inflation.

"Investors are looking for that rock of certainty – something to hang your hat on for greater predictability of where the Fed's going with interest rates," said Greg Bassuk, CEO of AXS Investments. "The messaging that the pace of rate increases can begin slowing as early as December was that rock."

The 10-year Treasury yield eased a bit on the news.

Wednesday's rally provided an 11th-hour boost to a winning November. The Dow and S&P 500 ended the month up roughly 5.7% and about 5.4%, respectively, while the Nasdaq Composite gained nearly 4.4%.

Lea la cobertura del mercado de hoy en español aquí.

Indexes close higher following afternoon rally

All three indexes ended higher Wednesday, coming off a rally on the back of Fed Chair Jerome Powell's comments.

The Dow closed up 737.24 points, or 2.18%, to 34,589.77. Meanwhile, the Nasdaq Composite jumped 4.41% to 11,468.00. The S&P 500 added 3.09% to 4,080.11.

That marked a reversal from earlier in the day, when the Dow and S&P 500 were lower following a mixed bag of new economic data in the morning.

— Alex Harring

Office REITs at risk of dividend cuts, BMO Capital Markets says

Expect dividend cuts to mount at companies in the office real estate investment trust space in the near future, according to BMO Capital Markets.

"Office REITs are facing a triple whammy of rising interest rates, weakening tenant demand, and deteriorating leasing economics," wrote analyst John Kim in a note to clients Tuesday. "With rising uncertainty and 7 REITs in the sector trading with a dividend yield above 8%, management teams may decide to cut their dividends now, to fund debt repayment and capex."

He highlighted Easterly Government Properties, SL Green Realty and Vornado Realty Trust as some of the companies most susceptible to dividend cuts.

"In the coming quarters, Office REITs will continue to be faced with an expanding pool of sublease space as companies look to cut costs and trim on space while embracing the remote and hybrid work models," he said.

— Samantha Subin

Bank of America downgrades Carvana

Bank of America downgraded Carvana to neutral, saying the stock could go to zero without a fresh injection of capital.

"We now believe that without a cash infusion, Carvana is likely to run out of cash by the end of 2023. There is no indication yet of a potential cash infusion, for example from the Garcia family (the CEO and his father the chairman), and it is impossible to predict if and when that would occur," according to a Wednesday note from the firm.

"This combined with the high short interest creates a situation where this stock's performance looks binary: either it goes to zero or it is worth many times its current price of $7.34," the note added.

CNBC Pro subscribers can read the full story here.

— Sarah Min

Dow breaks 600 points midway through final trading hour

The Dow hit more than 600 points up in the final half hour of trading.

The benchmark comes as the 30-stock index has marched up following Fed Chair Jerome Powell's comments indicating the central bank will slow its interest rate hike campaign.

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— Alex Harring

A soft landing is possible, but that a 'tremendous' bull market probably isn't coming in 2023, Yardeni says

Ed Yardeni of Yardeni Research thinks that the economy will likely hold up amid the Federal Reserve's rate hikes to tame high inflation, leading to a soft landing next year.

Still, that won't lead the S&P 500 to a new high for the next two years.

"I don't think we're looking at any tremendous bull market coming up here given that valuation multiples are still quite high," he said, during CNBC's "Halftime Report" on Wednesday, adding that he sees earnings going sideways for the next few years.

He thinks that the S&P 500 may get to about 4,800 in 2023, which would mark a new all time high and is more than 21% higher than where the index is currently trading. Still, he said he doesn't see stocks going much higher than that next year.

He added that he thinks it will be a stock picker's market going forward

—Carmen Reinicke

Dow briefly hits 400 points as traders ready for final hour of trading

The Dow briefly traded more than 400 points higher on the back of Fed Chair Jerome Powell's comments Wednesday afternoon.

That equates to a gain of about 1.2% for the 30-stock index.

Meanwhile, the S&P 500 was up about 1.9%, while the tech-heavy Nasdaq Composite added 2.9%

— Alex Harring

Blackstone is a top pick in financials, Morgan Stanley says

Morgan Stanley named Blackstone a top pick in financials as investors prepare for a potential pivot from the Federal Reserve.

"While we remain cautious generally on asset mgrs over the next 3-12 months given the volatile and less certain macro environment, we are poised to be nimble on early cycle opportunities and thus selectively adding risk to our Financials' Finest list with the addition of BX as we prepare for the pivot and peak rates," analyst Betsy Graseck wrote.

The analyst said the stock is at an attractive entry point after its decline this year. Shares of Blackstone are down roughly 33% in 2022.

CNBC Pro subscribers can read the full story here.

— Sarah Min

S&P 500 erases all of Monday-Tuesday decline — and then some — on back of newfound bullishness

The S&P 500 clawed back all of the Monday-Tuesday decline on Wednesday on the back of Federal Reserve chairman Jerome Powell's remarks in Washington signaling a a more moderate pace of future increases in the central bank's benchmark overnight lending rates.

The S&P 500 got as high as 4037 intraday Wednesday, surpassing last Friday's holiday-shortened Black Friday close of 4026. The low on Tuesday — touched again early Wednesday — was in the area of about 3938.

All 11 sectors rallied in the S&P 500, with communication services, tech and consumer discretionary outperforming and the other eight underperforming. The laggards were chiefly energy, financials, industrials and consumer staples stocks.

— Scott Schnipper

Powell continues to believe in a path to a soft-ish landing

I do continue to believe there's a path to a soft landing, says Jerome Powell
I do continue to believe there's a path to a soft landing, says Jerome Powell

Federal Reserve Chair Jerome Powell says he continues to believe in a path to a "soft-ish" landing — even if the path has narrowed over the past year.

"I would like to continue to believe that there's a path to a soft or soft-ish landing" Powell said at the Brookings Institution.

"Our job is to try to achieve that, and I think it's still achievable," Powell said. "If you look at the history, it's not a likely outcome, but I would just say this is a different set of circumstances."

— Sarah Min

Slowing down on rate hikes is a good way to balance risks, Powell says

Fed Chair Jerome Powell said during his remarks Wednesday that chilling interest rate hikes will help balance management risks.

"We have a risk management balance to strike," he said. "We think that slowing down at this point is a good way to balance the risks."

— Alex Harring

S&P 500 rises more than 1%, Nasdaq cracks 2% following Powell's remarks

The S&P 500 continued its ascent Wednesday on the heels of Fed Chair Jerome Powell's remarks, reaching more than 1% up despite trading down earlier in the day.

The broad index was up 1.3% around 2 p.m.

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Meanwhile, the tech-heavy Nasdaq Composite was up more than 240 points, or 2.2%, around the same time.

— Alex Harring

Indexes jump on Powell comments

Fed Chair Jerome Powell's comments indicating the central bank will slow future interest rate hikes as soon as December put upward pressure on the three major indexes.

The S&P 500 jumped up 0.6% from the red on the news.

The Dow was near flat after trading down for most of the day.

The Nasdaq Composite gained steam to 1.3% up.

— Alex Harring

Powell says Fed can "moderate the pace" of future rate increases due to lagged effect of past hikes

Federal Reserve chairman Jerome Powell told an audience at the Brookings Institution Wednesday that the central bank can afford to ease back on its tighter monetary policy at its December meeting (due to wrap up Dec. 14).

The lagged effect of higher rates already taken in 2022, plus the drawing down of the size of the Fed's balance sheet through quantitative tightening, mean "it makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down," Powell said.

"The time for moderating the pace of rate increases may come as soon as the December meeting," said the 69-year-old Fed chair.

In response to Powell's remarks, the S&P 500 quickly gained to about 3970 vs about 3950 before the address.

— Scott Schnipper, Jeff Cox

Stocks making the biggest moves midday

These are the companies making the biggest moves midday:

CrowdStrike — Shares dropped 19% after the cybersecurity provider said new revenue growth is weaker than expected. The company did beat estimates on the top and bottom lines in its most recent quarterly results. Stifel downgraded the stock to hold from buy after the earnings report.

Horizon Therapeutics — The pharmaceutical company's shares soared 26% after Horizon said it was in preliminary talks about a possible sale with several large pharma companies, including Amgen, Sanofi and Johnson & Johnson's Janssen Global Services unit.

Petco — Shares of Petco jumped 12% after reporting third-quarter revenue that was slightly above Wall Street estimates. The pet product retailer's comparable store sales rose 4.1%, above a StreetAccount estimate of 3.5%. Its adjusted EPS was in-line with expectations.

See the full list here.

— Tanaya Macheel

Credit Suisse analyst looks for S&P 500 to break below 3,906 point mark

The S&P 500 is showing signs of stalling in its 200-day average short of recovery objectives, but strength is a corrective, according to Credit Suisse.

Analyst David Sneddon said the firm maintains its view that October brought a bear market rally. He said he's now looking for a break below the 3,906-3,907 point mark to establish what he called a "double top."

The current 200-day average sits at 4,052.

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— Alex Harring

Stocks mixed as investors look to second half of trading day

Indexes were down as investors looked to the second half of the trading day.

The Dow was down 0.8%. It was followed by the S&P 500, which has lost 0.5%.

Meanwhile, the Nasdaq Composite shed 0.1% despite trading up for much of the day.

Morning trading was driven by mixed economic data, but observers expect many investors are awaiting Fed Chair Jerome Powell's speech at 1:30 p.m.

— Alex Harring

Indexes set to end November up

Despite mixed trading for the final day in November, the three major indexes remain poised to end the month positively.

The Dow was on pace to end the month up slightly under 3%. The S&P 500 is poised to add 2.1%.

Lagging behind the other two, the Nasdaq Composite is on track to end November 0.3% higher.

— Alex Harring

BlackRock's DeSpirito calls healthcare a "superior" place to park

BlackRock's Tony DeSpirito views healthcare as a "superior" area of the market to invest in, highlighting the sector's reasonable valuation and long-term growth trajectory at an event Wednesday in New York City.

While the chief investment officer of U.S. fundamental equities also sees opportunities in utilities and staples, he views healthcare earnings as slightly more reasonable, trading at a roughly 10% discount to the market.

"You get better long-term growth, better recession resiliency, and you got a better valuation," DeSpirito said, noting the sector is a large overweight in a slew of BlackRock's funds.

The sector should also benefit from the aging population, given that individuals consume more healthcare as they age, he said. That should also strengthen the demand outlook.

Despite the tough macro climate, DeSpirito said investors should stay invested in the market, with this year's multiple contraction putting equities at a discount versus the start of 2022.

"I think we should stay invested because equity is on sale, but we should do so in a resilient way because of the earnings risks that are out there," he said.

— Samantha Subin

Nasdaq briefly flashes red

The tech-heavy Nasdaq Composite briefly turned negative for the day, bringing at one point all three of the major indexes into the red. It then came back up to 0.2%.

It's the only of the three major indexes up as traders look to the end of the second hour of trading. The Dow is down 171 points, or 0.5%, after previously moving down more than 200 points. The S&P 500 has dropped 0.2%.

Stocks have whipsawed over the course of the morning as investors weighed new economic data that offers conflicting ideas about the state of the economy.

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— Alex Harring

Wayfair sees strong holiday weekend sales as customers new and old turned up for bargains

All signs have been pointing to weak sales of home furnishings after consumers spent heavily in the category during the pandemic. In recent days, companies like Williams-Sonoma and RH have received downgrades.

However, Wayfair shares are up more than 6% in premarket trading Wednesday after reporting strong five-day holiday weekend sales. From Thanksgiving to Cyber Monday, the company saw a low-single digit sales increase in the U.S. compared with the same period last year.

The company said repeat customers made up 73% of its orders during the holiday weekend, but it also pulled in new shoppers. Sales also strengthened leading into the holiday weekend.

The big question for retailers continues to be what will happen in the weeks leading into Christmas. Bargain-hungry shoppers turned up in record numbers for the big sales but the entire season will hinge on what happens over the next few weeks.

-Christina Cheddar Berk

Job openings fall slightly in October

Job openings fell in October slightly more than expected but remained well above the number of available workers, the Labor Department reported Wednesday.

The Job Openings and Labor Turnover Survey, a closely watched indicator of employment slack, showed there were 10.33 million available positions for the month. That was slightly below the FactSet estimate of 10.4 million and down from 10.69 million in September.

There are now 1.7 job openings per available worker.

The quits level, an indicator of worker confidence, fell slightly to 4.03 million. The quits rate as a share of the workforce decreased to 2.6%, a 0.1 percentage point decline.

—Jeff Cox

Pending home sales fell 4.6% in October

Pending home sales, which reports signed contracts on existing homes, fell 4.6% in October, according to the National Association of Realtors. The index fell for a fifth consecutive month.

The index declined 10.2% in the prior month in its lowest level since June 2010, excluding April 2020, which was during the onset of the pandemic.

— Sarah Min

S&P 500 flat as investors enter first hour of trading

The S&P 500 was flat as trading kicked off.

The Dow, meanwhile, was slightly down, having shed 49 points, or 0.15%.

The Nasdaq Composite, on the other hand, climbed 0.4%.

— Alex Harring

Goldman Sachs expects these big takeaways from Powell speech

Federal Reserve Chairman Jerome Powell in a speech later Wednesday likely will confirm expectations of smaller rate increases ahead while also signaling that he's still worried about inflation, according to Goldman Sachs.

In a client note Wednesday morning, the Wall Street firm's economists outlined a few primary expectations when the central bank leader speaks at the Brookings Institution.

"Powell is likely to hint that the [Federal Open Market Committee] will slow the pace of rate hikes at the December meeting but push back against the recent easing in financial conditions with two hawkish counterpoints," Goldman economist Ronnie Walker wrote.

"First, Powell is likely to suggest that the FOMC will need to raise the funds rate to a higher peak than it projected at the September meeting, echoing his remarks at the November press conference and following similar comments from several other FOMC members over the last few weeks," Walker added. "Second, he is likely to emphasize that inflation remains too high and the labor market remains extremely tight."

Goldman expects the Fed to raise its benchmark interest rate by 0.5 percentage point in December, followed by three successive hikes of 0.25 percentage point before pausing.

The Powell speech is due at 1:30 p.m. ET. A question-and-answer session will follow.

—Jeff Cox

New Addams Family show 'Wednesday' could help boost Netflix, according to Keybanc

The new Addams Family show "Wednesday" is now Netflix's most watched series in a week, with viewers logging 341 million hours in the first week of its release, Keybanc says.

"Netflix's successful launch of Wednesday … screens as an incremental positive against rather underwhelming viewership for The Crown (consistent w/w declines) and perceived viewership competition from [the] World Cup," Keybanc Capital Markets analyst Justin Patterson said.

Many investors have pointed to the declining viewership of "The Crown" as an incremental risk factor to Netflix's paid net additions, particularly amid concern about World Cup competition and a lighter content slate, he wrote in a note Tuesday.

"We believe Wednesday's strong start changes the conversation," Patterson said. "As such, we believe Wednesday's performance over the next few weeks will be highly tracked, both at the aggregate viewership level and country level."

Whether the performance becomes a more meaningful drive of gross additions remains to be seen, at a minimum the success of "Wednesday" and less viewership competition are positives for retention, he added.

— Michelle Fox

Third-quarter GDP gets revised higher

The U.S. economy grew at a slightly faster pace in the third quarter than was previously reported, with third-quarter GDP expansion being revised up to 2.9% from 2.6%.

To be sure, Tiffany Wilding of Pimco noted there's a "bit of noise that you have to take into account, because inventories and trade numbers can obviously be very volatile."

"When you exclude those more volatile categories, growth was actually pretty subpar," Wilding said.

— Fred Imbert

Stock futures rise slightly on new data showing private hiring fell

Stock futures saw a slight boost after new data from processing firm ADP showed private hiring sharply fell in November.

Companies added just 127,000 positions for the month, a notable drop from the 239,000 the firm reported for October and the smallest gain since January. That came in below the Dow Jones estimate of 190,000 for the month.

Investors could take the data as a sign that the economy is tightening – something to cheer for those hoping it could influence the Fed to slow or stop interest rate hikes as they grow increasingly concerned about the impact of an incoming recession on the stock market.

— Alex Harring, Jeff Cox

Stocks making the biggest moves in the pre-market

These are the stocks making the biggest moves before the bell:

Hormel – The food producer's stock slid 6.4% in the premarket after reporting a mixed quarter. Earnings beat estimates, but sales came up short of Wall Street forecasts. The company also issued a weaker-than-expected outlook and said it expected a continued volatile and high cost environment.

Petco – Petco rallied 8% after its report of adjusted quarterly earnings of 16 cents per share matched Street forecasts and revenue was slightly above estimates. A comparable store sales rise of 4.1% beat the FactSet consensus estimate.

CrowdStrike – The stock plunged 17.6% in the premarket after the cybersecurity company's subscription numbers came in below analyst forecasts. Though it reported better-than-expected profit and revenue for its latest quarter, the company noted economic uncertainty is prompting customers to delay spending.

See the full list here.

—Peter Schacknow, Alex Harring

Amazon has most downside among megacap internet stocks, Jefferies says

Another large decline for stocks could be particularly painful for Amazon investors, according to Jefferies.

In a note to clients on Tuesday night, analyst Brent Thill examined the bear case scenarios for large internet and software stocks and found Amazon to be the most exposed in such a situation.

"We believe that AMZN has the most downside in our mega-cap coverage given its exposure to inflationary cost headwinds and a potential impact from slowing consumption. We show that a bear case scenario of $60B in EBITDA at a 9x trough multiple would yield a $51 dollar stock, or ~45% downside from current levels," Thill said.

On the other hand, Microsoft was the "most insulated" by Jefferies' calculations, with only 27% downside in a bear case scenario.

Jefferies has a buy rating on both stocks.

—Jesse Pound, Michael Bloom

Elon Musk says Fed must cut rates immediately to avoid severe recession

Elon Musk, the Tesla CEO and new Twitter owner, said the Fed risks increasing the likelihood of a severe recession if it does not cut interest rates immediately.

"Fed needs to cut interest rates immediately," he tweeted. "They are massively amplifying the probability of a severe recession."

— Alex Harring

Bitcoin, Ether on track to post worst month since June

Bitcoin and Ether are each poised to make November the worst months since June as uncertainty over cryptocurrencies mounts.

Bitcoin is down 17.2% compared with the start of the month. If that stays when markets close Wednesday, it would be the worst performance since it dropped 40.3% over the course of June.

Ether is slated to end the month down 19%, which would also be the biggest lost since June's 47.4% drop.

The slides come as investors grow increasingly wary of crypto following the collapse of exchange FTX.

— Gina Francolla, Alex Harring

Euro zone inflation drops, fueling hopes of ECB rate hike slowdown

Euro zone inflation dropped by more than expected in November, fueling market hopes that record-high price growth across the bloc has peaked and the European Central Bank will begin slowing its interest rate hikes next month.

The consumer price index grew by 10% year-on-year, down from 10.6% in October and comfortably below a consensus projection of 10.4% in a Reuters poll of analysts.

However, food price inflation, a key worry for policymakers, continued to accelerate, with falling energy prices accounting for the bulk of the slowdown.

- Elliot Smith

European markets higher as investors track euro zone inflation data

European markets were cautiously higher on Wednesday as regional investors monitored the latest inflation data from the euro zone in November.

The pan-European Stoxx 600 was up 0.8% in early trade, with autos adding 1.8% to lead gains as all sectors and major bourses entered positive territory.

Elsewhere overnight, Asia-Pacific shares were mostly higher on Wednesday even as the reading for China's November factory activity fell short of expectations, dropping to the lowest reading since April.

- Elliot Smith

Yield curve inversion between 2Y/10Y Treasuries widened Tuesday

A key part of the yield curve closely watched by Wall Street investors and analysts alike inverted further on Tuesday, potentially signaling a recession ahead.

The yield on the 10-year U.S. Treasury ticked up about 4 basis points to trade at 3.752% on Tuesday. At the same time, the two-year yield rose slightly to 4.481%. Yields move inverse to price, and a basis point is equal to 0.01%.

The difference between yields, called the yield curve, is a recession signal when investors are getting better payback for snapping up shorter-term bonds than longer term ones. Currently, the spread between the 10-year and 2-year Treasury bonds is more than 73 basis points, the widest in decades.

What this inversion signals is that the Fed may have tamed inflation enough to cool down the economy and may be able to pause or pivot soon. It can also be read as a sign that a recession is on the horizon.

—Carmen Reinicke

ADP jobs report, JOLTS rolling out Wednesday

Two reports issued on Wednesday should give investors some insight into the state of the U.S. labor market in advance of Friday's big payrolls report.

The ADP jobs reading is due Wednesday at 8:15 a.m. ET. Economists polled by Dow Jones anticipate that private employers grew their payrolls by 190,000 positions in November, a decline from October's increase of 239,000.

At 10 a.m., the U.S. Bureau of Labor Statistics will issue the results of the Job Openings and Labor Turnover Survey (JOLTS). FactSet estimates that there were 10.4 million job openings in October. Back in September, employment openings totaled 10.7 million.

Fed policymakers keep a close eye on the JOLTS report, searching for clues on the state of the labor market and whether it needs further cooling.

The main event in economic data this week will be the November nonfarm payrolls report, due Friday at 8:30 a.m. Dow Jones expects that payrolls grew by 200,000, which is down from October's increase of 261,000. Economists are also calling for the unemployment rate to hold steady from the prior month at 3.7%.

-Darla Mercado

CrowdStrike, NetApp slump in after hours trading

A few stocks plunged in after hours trading Tuesday after releasing earnings results that fell short of Wall Street's expectations.

CrowdStrike — CrowdStrike Holdings plunged more than 18% after giving light guidance for fourth-quarter revenue, even though its earnings results topped Wall Street estimates.

NetApp — NetApp stock fell 10.8% after cloud services and data management provider saw weaker-than-expected revenue in its latest quarter. NetApp reported adjusted earnings per share of $1.48, beating estimates of $1.33. But its revenue of $1.66 billion fell short of the $1.68 billion Wall Street anticipated, per Refinitiv. NetApp also issued weak forward guidance.

Read more about stock moves here.

—Carmen Reinicke

Stock futures open little changed Tuesday evening

Stock futures were little changed Tuesday evening as Wall Street awaits a Wednesday speech from Federal Reserve Chair Jerome Powell that may give further insight into future rate hikes.

Futures tied to the Dow Jones Industrial Average rose one point, or 0.003%. S&P 500 futures and Nasdaq 100 futures slipped 0.03% and 0.08%, respectively.

—Carmen Reinicke