Stocks fall a second straight day, Nasdaq drops 1% as Fed cites lingering inflation woes: Live updates

U.S. stocks closed in the red Wednesday.

The Dow Jones Industrial Average pulled back 180.65 points, or 0.52%. The S&P 500 dipped 0.76%, while the Nasdaq Composite declined 1.15%.

— Hakyung Kim

Morningstar said all three of the homebuilding stocks it covers "look fully valued according to our metrics today," including two that Warren Buffett's Berkshire Hathaway this week disclosed buying in the second quarter.

Berkshire bought $726 million worth of D.R. Horton shares, $70 million worth of NVR shares and $17.2 million of Lennar in the second quarter, according to its latest 13F to the SEC.

Morningstar analyst Brian Bernard rates D.R. Horton three stars and pegs its fair value at $120 a share, below Wednesday's price of about $123; Morningstar also gives Lennar only three stars and puts its fair value at $133, about 8% above Wednesday's level; and Toll Brothers three stars and a price target of $76, more than 5% below where Toll recently traded. Morningstar doesn't cover NVR.

Morningstar sees total housing starts falling 17% in 2023 to 1.295 million units, single-family starts down 18% to 825,000 units and multifamily starts off 14.5% to 470,000 units, analyst Susan Dziubinski wrote.

— Scott Schnipper, Michael Bloom

The retail earnings reports coming in the back half of August provide upside potential for investors through options trades, according to the Goldman Sachs derivatives research team.

Analyst Sesha Phani said in a note to clients on Wednesday that Bath & Body Works, Macy's and Nordstrom were all call-option long candidates ahead of their earnings reports next week. Goldman analysts are optimistic about the management strategies for all three companies despite a choppy retail environment.

By purchasing call options, investors can capture the upside of a stock if it rallies on the heels of the report, while limiting the downside risk if the results are worse than expected.

— Jesse Pound

Goldman Sachs downgraded two real estate investment trusts, Tanger Factory Outlet Centers and Kimco Realty, to neutral from buy on Wednesday.

Tanger's funds from operations (FFO) multiple has expanded 74% over the last 12 months, its stock price has significantly outperformed consensus estimate revisions and its multiple is near the multiple- to-growth trend line across REITs, analyst Caitlin Burrows wrote in a note to clients.

Burrows also expects Kimco's FFO growth to be more limited than previously thought. While its FFO growth will accelerate over 2024 and 2025, it will lag that of its retail peers, she said.

Shares of Tanger Factory Outlet are up nearly 34% year to date, while Kimco Realty has last nearly 9%.

— Michelle Fox

Fundstrat head of research Tom Lee and Hightower Advisors chief investment strategist Stephanie Link said at a CNBC Pro Talks event that they are both bullish on the outlook for housing stocks and energy companies.

"Both sectors are super cheap. I mean they're always kind of cheap, but they're really cheap," Link said.

Read more about their reasoning and energy sector picks at CNBC Pro.

— Jesse Pound

Utilities and consumer staples led the S&P 500 on Wednesday afternoon, up 0.71% and 0.26%, respectively. Financials closely followed, up 0.25%.

Power generation company AES Corporation led the utilities sector in afternoon trading with a 2.8% gain. Consolidated Edison and Public Service Enterprise were also higher by about 1.5%. Target led consumer staples, trading 3.7% higher after its second-quarter earnings beat expectations. 

Communication services was the major laggard in the broad-based index, down 0.7%. The sector was dragged down by media titans Paramount, Netflix and Comcast. Facebook parent Meta and Match Group were also posting losses of at least 1%. 

— Pia Singh

Deutsche Bank found in a survey that Anheuser-Busch InBev's Bud Light is regaining favor after the drama surrounding its decision to use a transgender influencer in marketing.

The survey showed a falling share of beer drinkers no longer buying the brand between July and August, analyst Mitch Collett said in a note to clients Wednesday. And former Bud Light drinkers who say they are very unlikely to buy the brand in the next three to six months has fallen significantly.

Other brands that have benefited from Bud Light's losses also showed less gains for the switches among consumers in August than July, he added.

Also on Wednesday, Target CEO Brian Cornell said "negative reaction" to the retailer's pride-themed collection weighed on sales.

— Alex Harring

The minutes from the Federal Reserve's July minutes pointed toward "upside risks" to inflation, which could lead to more rate hikes down the road.

"With inflation still well above the Committee's longer-run goal and the labor market remaining tight, most participants continued to see significant upside risks to inflation, which could require further tightening of monetary policy," the meeting summary stated.

— Fred Imbert, Jeff Cox

Weak economic data from China has rattled markets over concerns of weakening demand and a sluggish property market. Although the news soured investor sentiment during Tuesday's trading session, Carson Group director and macro strategist Sonu Varghese believes the effects of the China's worsening economy will be seen more in the bond market, rather than in equities.

"I don't want to say we are insulated from what's happening in China, but if anything I believe there will be more of an impact in the bond market," said Varghese.

"If China's economy is under pressure currencies under pressure, they would probably spend some of their reserves, or the state-backed commercial banks will probably use some of their foreign assets to defend the currency. It could have an impact on agency mortgage backed securities, because they do they have historically bought more of that," Varghese continued.

To be sure, he noted mortgage rates are already are in the 7% range.

"We're still seeing housing demand start to go up despite high mortgage rates, so I don't think there'll be a big impact directly on the industrial side of the economy, but maybe on the bond market at the margin," he added."

— Hakyung Kim

Wolfe Research's Rob Ginsberg pointed to a worrying trend in the market: Stocks are losing momentum while in overbought conditions.

"This is exactly what we are seeing with the NASDAQ, as its weekly MACD triggered a sell signal, it's first since last September, but more importantly to us, it's first within a deeply overbought condition since early last year," Ginsberg wrote. "The S&P is not quite there, but we would be very surprised if it doesn't follow the NDX's lead."

— Fred Imbert, Michael Bloom

These are some of the stocks making the biggest moves midday:

• Target – Target shares added 4% even after the retailer cut its full-year earnings forecast and second-quarter sales fell short of expectations.
• TJX Companies — The discount retailer jumped 4% after beating Wall Street expectations for its fiscal second quarter.
• Keurig Dr Pepper —  The beverage stock advanced 2% following a UBS upgrade to buy from neutral. 

See the full list here.

— Alex Harring

There were 11 new S&P 500 stocks that hit fresh lows during midday trading Wednesday. Among them, stocks such as Moderna and SolarEdge Technologies fell to their lowest levels since 2020.

Meanwhile, there were just four S&P 500 stocks that reached fresh highs: Comcast, the TJX Companies, Arthur J. Gallagher and Eli Lilly.

Here are the other names hitting fresh 52-week lows:

• Etsy trading at lows not seen since July, 2022
• Conagra Brands trading at lows not seen since Apr, 2020
• Campbell Soup Company trading at lows not seen since Mar, 2022
• Estee Lauder trading at lows not seen since May, 2020
• Kellogg trading at lows not seen since Mar, 2022
• Willis Towers Watson trading at lows July, 2022
• Illumina trading at lows not seen since Aug, 2017
• Moderna trading at lows not seen since Nov, 2020
• SolarEdge Technologies trading at lows not seen since July, 2020
• Sealed Air trading at lows not seen since Aug, 2020
• Eversource Energy trading at lows not seen since Mar, 2020

— Sarah Min, Chris Hayes

Investors will be looking for more clues about where interest rates are headed when the Federal Reserve releases minutes from its latest meeting at 2 p.m. Wednesday.

The Fed approved a 0.25 percentage point hike at the meeting, taking its key borrowing rate to a target range of 5.25%-5.5%, the highest level in more than 22 years. However, the post-meeting statement offered little guidance about what comes next, and Chairman Jerome Powell's news conference featured conflicting views.

Markets overwhelmingly expect that the rate increase approved at the July 25-26 meeting will be the last, and several Fed officials in the past few weeks have made statements that seemingly bolstered that view.

However, others have noted that the central bank is well away from achieving its 2% long-run inflation goal and at the least will need to hold rates at a higher level.

—Jeff Cox

Stocks of some of China's biggest companies declined Wednesday.

The iShares MSCI China ETF pulled back 1.4%. The China-focused fund is down nearly 7% for the year.

Tencent and JD.Com saw their shares fall on the back of their earnings announcements. Both companies' shares declined by more than 2%. Alibaba and Baidu shares lost 2% and 2.8%, respectively.

The People's Bank of China reduced interest rates from 2.65% to 2.5% on Tuesday, in what was the central bank's second rate cut in three months. The country's July economic data, also released Tuesday, missed analyst estimates and heightened concerns of slowing growth and deflations.

— Hakyung Kim

Tower Semiconductor shares slid 7% and touched a fresh 52-week low on Wednesday morning.

The action came after Intel announced a mutual agreement to end its $5.4 billion plan to acquire Tower. Intel cited the inability to obtain necessary regulatory approvals in a timely fashion as the driver.

Intel will pay Tower a termination fee of $353 million.

Read more about this development here.

-Darla Mercado, Arjun Kharpal

The surprising downturn in homebuilder sentiment on Tuesday could be a warning sign about the broader economy, according to Wolfe Research.

Strategist Chris Senyek said in a note to clients on Wednesday that the report — which saw the index fall to 50 in August from 56 in July — may show that the "all-time low affordability is finally starting to take a toll on sales activity and homebuilder sentiment."

"Since the beginning of the pandemic, housing values have pushed up household wealth by +$12 trillion (vs. stocks at 'only' +$7 trillion). While one month doesn't make a trend, a sustained drop in home prices has the potential to unwind the 'virtuous mini-cycle' that's driven upside surprises & equity markets over the past six months," the note said.

— Jesse Pound

Mizuho Securities says Chevron will continue to grow as oil prices climb.

The firm upgraded Chevron stock to buy on Wednesday. Analyst Nitin Kumar highlighted the company's expansion of the Tengiz oilfield with the Wellhead Pressure Management.

"Although oil mix has trended below the long term 50% indicated by CEO Mike Wirth on the earnings call, we expect it to increase as new well productivity improves," Kumar said.

Chevron shares gained 1.2% Wednesday morning.

CNBC Pro subscribers can read the full story here.

— Brian Evans

Despite the stock's more than 200% surge this year, analysts remain bullish on Nvidia ahead of its quarterly print after the bell on Aug.23.

"There is clearly some hesitation to buy a name up ~200% this year but we believe the stock will look cheap exiting earnings as the Street moves to our $15+ EPS estimate next year on its way to $20+, as supply fills in," said Barclays analyst Blayne Curtis in a recent note.

Read why analysts are going gaga for the stock here.

— Samantha Subin

Wells Fargo thinks GE HealthCare Technologies will benefit from the growth of a key Alzheimer's drug which requires regular MRI use.

The firm initiated coverage of GEHC stock on Wednesday with an overweight rating. Shares rose 1.9% Tuesday morning.

"Based on our analysis of the number of patients on Alzheimer's drugs in the US, EU and Japan, we estimate ~$47 mil of incremental revenues in 2024 (20 bps growth contribution) to GEHC," Analyst Larry Biegelsen said.

CNBC Pro subscribers can read the full story here.

— Brian Evans

Shares of the U.S. cryptocurrency exchange Coinbase rose 2.9% after the National Futures Association, a CFTC-designated self-regulatory organization, cleared the company to operate a futures trading service alongside its existing spot crypto trading offering.

The global crypto derivatives market represents ~75% of crypto trading volume worldwide, according to Coinbase.

The approval comes as the industry watches for the Securities and Exchange Commission to approve several applications for spot bitcoin ETFs. The regulator has only allowed bitcoin futures ETFs to operate so far. Coinbase has surveillance sharing agreements with several of the funds awaiting a response, meant to address SEC concerns about market manipulation.

— Tanaya Macheel

U.S. stock began Wednesday's trading session near the flatline.

The Dow Jones Industrial Average declined marginally. The S&P 500 traded down less than 0.1%. The Nasdaq Composite, meanwhile, fell 0.3%.

— Hakyung Kim

The Federal Reserve meeting minutes due out this afternoon could shed light on how central bankers are viewing the potential lagged effects of the spring's regional banking crisis and their own policy tightening, said Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets.

"These two areas of the Fed's current operating bias will both be spaces to watch this afternoon and run the risk of exaggerating the rally from the latest yield highs. Additionally, with Powell explicitly saying that the Fed would continue to run down the balance sheet while also cutting rates, any further discussion on the role of the balance sheet as terminal arrives will be a space to watch within this afternoon's official communication," Lyngen said in a note to clients Wednesday.

The minutes from the July meeting are due out at 2 p.m. ET. The Federal Open Markets Committee next official meeting is scheduled to start Sept. 19.

— Jesse Pound

Housing starts rose 3.9% month-over-month to 1.45 million in July, according to data from the U.S. Census Bureau and the Department of Housing and Urban Development. This came above StreetAccount's consensus estimate of 1.44 million for new residential construction.

Meanwhile, building permits rose 0.1% from the prior month to 1.44 million in July. Economists had anticipated 1.45 million, according to StreetAccount. The posted figure marked a 13% year-over-year decline.

— Hakyung Kim

Here are the companies making the biggest moves in the premarket:

• Target – Target shares popped nearly 8% before the market opened even as the retailer slashed its full-year forecast and posted revenue for the recent quarter that fell short of Wall Street's expectations.
• Tesla – The electric vehicle stock lost more than 2% premarket on news that it cut prices on existing Model S and Model X inventories in China.  
• Cava – Shares of the Mediterranean fast-casual chain jumped more than 9% after posting a profit in its first quarterly report following its initial public offering.

Read the full list of names moving here.

— Samantha Subin

UBS upgraded Keurig Dr Pepper stock to buy from neutral on Tuesday, and noted that shares are undervalued compared to historic averages.

"With earnings set to inflect and an attractive entry point, we believe the risk/reward now skews to the upside," Analyst Peter Grom said.

Shares added 1.3% Wednesday before the bell.

CNBC Pro subscribers can read the full story here.

— Brian Evans

Target shares popped more than 7% in the premarket after the retailer posted quarterly earnings that beat analyst expectations. The company earned $1.80 per share, while analysts polled by Refinitiv had forecast a profit of $1.39.

That said, Target cut its full-year outlook as it struggles to entice customers to buy more than just necessities.

— Fred Imbert, Melissa Repko

U.S. Treasury yields stumbled on Wednesday as investors looked ahead to the release of the Federal Reserve's latest meeting minutes, which could provide fresh clues about interest rate policy, and considered the latest inflation data from the U.K.

At 4:14 a.m. ET, the 10-year Treasury yield was trading over three basis points lower at 4.1895%. The 2-year Treasury was down by just under four basis points to 4.9142%.

Yields and prices move in opposite directions. One basis point equals 0.01%.

— Sophie Kiderlin

European markets opened lower Wednesday as investors assess U.K. inflation data.

The pan-European Stoxx 600 index was down 0.3% in the first minutes of trading, with most sectors trading in the red. Mining stocks led losses, with a 1% drop, followed by banks, which dropped 0.8%. Retail stocks bucked the trend with a 0.2% uptick.

— Hannah Ward-Glenton

New Zealand's central bank has held its benchmark policy rate at 5.5% for the second meeting in a row, in line with expectations from economists polled by Reuters.

The Reserve Bank of New Zealand said in a statement that the current level of interest rates is constraining spending and hence inflation pressure.

It added the official cash rate "needs to stay at restrictive levels for the foreseeable future" to ensure that inflation returns to its target range of 1 to 3% while supporting maximum sustainable employment.

— Lim Hui Jie

Sea Limited plummeted nearly 28.7% on Tuesday after the firm missed second-quarter revenue forecasts and said it will be ramping up investments — which could eat into profits.

The Southeast Asian tech giant posted a revenue of $3.09 billion in the quarter, compared with Refinitiv consensus estimate of $3.197 billion.

Total net income in the quarter was $331 million, compared with total net loss of $931.2 million in the same period a year ago.

Forrest Li, chairman and CEO of Sea, said that the firm has "started and will continue to ramp up investments in its core e-commerce business," in a sign that it is reversing its profitability strategy after months of cost cuts.

— Sheila Chiang

Business sentiment among large Japanese businesses ticked up in July, according to the Reuters Tankan survey.

The index for the manufacturing sector climbed to +12 up from +3 in June, while the non-manufacturing index showed a reading of +32, up from +23 in the previous month.

A reading greater than zero represents favorable conditions and below shows unfavorable conditions.

The strong results come after Japan reported stronger-than-expected gross domestic product growth for the second quarter on Tuesday.

— Lim Hui Jie

Second-quarter earnings season is drawing to a close, and the picture is looking grim in the way of profits, says John Lynch, chief investment officer of Comerica Wealth Management.

Companies in the S&P 500 have posted a year-over-year decline of about 5% in earnings per share for the period ending June 30. It also marks the third consecutive quarterly decline for the index, Lynch wrote in a note late Tuesday. Sectors leading the profit slump for the quarter include energy, materials and health care.

Even with the slump, valuations have climbed. "When considering valuation, we believe the 'E' must substantiate the 'P' in the P/E ratio," Lynch added. "As it stands, we are still not convinced corporate profits can sustain a move above the 4,800-range the S&P 500 achieved early last year, particularly given the current level of interest rates."

— Darla Mercado

Tuesday's market losses seem to suggest selloff mode has resumed for August, but it was a notably bad day for certain major indexes.

For starters, both the S&P 500 and the Russell 2000 ended the session below their respective 50-day moving averages. This was a first for the broad market index since March 28, as well as the first for the small-cap benchmark since May 31. A close below the 50-day moving average may herald the start of a downtrend for these two indexes.

Meanwhile, the Dow – which just snapped a three-day winning streak – suffered its worst day since July 6 and slid more than 1%. It's still above its 50-day moving average, however.

The Dow Transports, closely watched as a leading economic indicator, dropped 1.76% for its worst day since May 31, but still managed to close above its 50-day moving average.

— Darla Mercado, Chris Hayes, Gina Francolla

Check out the companies making headlines in after hours trading:

• Cava — Shares of the Mediterranean restaurant chain advanced 8.1% after hours following a second-quarter earnings report that topped consensus estimates. The fast-casual chain posted $172.9 million in revenue, exceeding analysts' expectations of $163.2 million, according to FactSet. Earnings per share came to $0.21, while analysts surveyed by FactSet had forecast a loss of $0.02.
• Mercury Systems — The defense stock dropped 10.3% after missing Wall Street expectations for the fiscal fourth quarter. Mercury reported profit of 11 cents per share, excluding items, on revenue of $263.2 million. Analysts surveyed by FactSet estimated 52 cents earned per share and revenue of $278.8 million for the quarter. The company's full-year guidance similarly missed FactSet consensus forecasts.
• Stride — Shares popped 7.4% after the educational technology stock delivered a better-than-expected report in its fiscal fourth quarter. GAAP earnings per share of $1.01 topped the consensus estimate from analysts polled by FactSet by 14 cents, while revenue of $483.5 million also exceeded the forecast $460.7 million.

Read the full list here.

— Pia Singh

Futures tied to the Dow, S&P 500 and Nasdaq 100 all traded around flat shortly after 6 p.m. ET.

— Alex Harring