Dow closes higher as Powell says Fed’s next move is unlikely to be a hike: Live updates

The Dow Jones Industrial Average ended Wednesday higher by 87.37 points, or 0.23%, at 37,903.29. The S&P 500 slipped 0.34%, and the Nasdaq Composite lost 0.33%.

The day was a volatile one, with the major averages each spiking more than 1% at session highs as Federal Reserve Chair Jerome Powell assured reporters that the central bank's next move is unlikely to be a rate hike.

— Darla Mercado

Recent flows have been biased toward selling, with energy and utilities remaining the most favored sectors, according to Citi Research.

"While sectors were split rather evenly between net selling and buying, the largest signals for long-only were selling. In contrast, hedge fund flows were an even mix between selling and buying, with a tilt towards buys," analyst Alex Saunders wrote in a Tuesday note.

According to Saunders, the tech sector saw the highest inflows from long-only hedge funds during the last week of April trading, with only a few sectors seeing small outflows. Still, tech remains the most net sold.

Consumer staples was the sector with the largest selling last week, on the other hand. Based on recent flows, energy and utilities sectors are still preferred to health care, communications and tech, however, the analyst said.

— Pia Singh

Eleven stocks in the S&P 500 reached new 52-week lows. These included:

• Warner Bros. Discovery trading at lows not seen since February 2009
• Starbucks trading at lows not seen since June 2022
• Walgreens Boots Alliance trading at lows not seen since May 1998
• Caesars Entertainment trading at levels not seen since October 2022
• Bristol-Myers trading at lows not seen since July 2019
• CVS Health trading at lows not seen since March 2020
• Humana trading at lows not seen since April 2020

On the other hand, five stocks in the broader index reached new 52-week highs. Here are the names that hit the milestone:

• Garmin trading at levels not seen since October 2021
• Church & Dwight trading at all-time highs back through its history to 1976
• Arch Capital Group trading at all-time-high levels back to when it began trading on the Nasdaq in 2000
• 3M trading at levels not seen since February 2023
• DuPont trading at levels not seen since February 2022

— Lisa Kailai Han, Christopher Hayes

U.S. oil prices tumbled more than 3% to dip below $80 a barrel on Wednesday as crude stockpiles surged on lackluster demand.

The West Texas Intermediate contract for June delivery fell $2.83, or 3.45%, to $79.10 a barrel, the lowest level in seven weeks. Brent July futures lost $2.77, or 3.21%, to $83.56 a barrel.

U.S. oil inventory levels have risen to the highest levels since June 2023 as refiners process less crude as demand for gasoline has softened.

"The refiner is totally floundering on the run rate and that's because they don't believe there's demand there," said Bob Yawger, director of energy futures at Mizuho Americas.

— Spencer Kimball

Regional bank stocks rallied Wednesday, sending the SPDR S&P Regional Banking ETF (KRE) 4% higher in late afternoon trading following the Federal Reserve's latest policy decision to leave interest rates unchanged and scale back its qualitative tightening program.

That is the first up day for regional bank stocks as a group in five days.

The largest percentage gains in regional banks came in New York Community Bancorp, up 31%; Axos Financial, higher by 14%; Capitol Federal Financial, ahead 9%; Bancorp Inc., which gained 6%; and BankUnited Inc., better by 5.7%.

— Scott Schnipper

The dollar index declined 0.1% to 106.09 Wednesday afternoon following the Federal Reserve's decision to maintain its benchmark short-term borrowing rate in a range between 5.25% and 5%. The decision had been widely anticipated by the market.

However, the dollar index was still above Tuesday's low of 105.667.

— Hakyung Kim, Gina Francolla

The Federal Reserve on Wednesday kept interest rates steady, deciding not to lower rates as it contends with persistent pricing pressures.

The central bank kept its benchmark short-term borrowing rate in a targeted range between 5.25% and 5% in what was a widely anticipated move. The federal funds rate has been at that level since July 2023.

The Federal Open Market Committee voted to ease the pace at which it is lowering bond holdings on the Fed's balance sheet, a move that could signal an incremental easing of monetary policy.

The S&P 500 was slightly lower following the decision.

— Sarah Min, Jeff Cox

The recent market pullback is not anything out of the ordinary following a strong multimonth run in equities, according to Charles Schwab's Kevin Gordon.

"This is all part of a normal pullback after a strong rally since last October," said the director and senior investment strategist. "Relative to prior pullbacks and prior bull markets, this looks pretty normal and pretty healthy."

The consolidation and rotation seen over the past month is also helping remove some "frothy investor sentiment" that has been a risk to the market in recent months, he added.

— Samantha Subin

Peter Oppenheimer, the chief global equity strategist at Goldman Sachs, believes diversification will be key for investors this year.

To that end, he recommends investors barbell their portfolios with exposure to both quality growth and deep value stocks.

"There's some very cheap parts of the markets in value sectors which have been neglected for a very long time, but where you're starting to see some really strong compound cash returns for investors," Oppenheimer said on CNBC's "Money Movers" on Wednesday. He added that this was especially true in the energy and financials sectors, particularly for European banks.

Quality growth names consist of companies with strong balance sheets, therefore making them less sensitive to rising rates.

Likewise, Oppenheimer also believes investors should broaden their portfolios to ex-U.S. opportunities this year.

"That doesn't mean to be underweight of the U.S., but to have more broad global exposure because some of the more value orientated markets like Europe, like Japan, are actually holding up or even outperforming relative to the U.S. because they're a lot cheaper and therefore less exposed to the risks of rising rates," the strategist added.

— Lisa Kailai Han

Shares of luxury cruise line operator Viking popped 10.3% after the company's initial public offering on the New York Stock Exchange on Wednesday.

Viking started trading at $24 per share under the ticker "VIK," and was last at $26.55 a share during early afternoon trading Wednesday. The company was targeting a $10.4 billion valuation in its IPO, making it the third-largest cruise operator after Royal Caribbean and Carnival. 

Viking upsized its IPO after existing shareholders decided to sell an additional nine million shares due to strong demand from mutual fund investors, according to a source familiar with the situation, CNBC reported.

— Pia Singh, Seema Mody

The Dow bucked the other two major indexes' downtrend on Wednesday.

The blue-chip average added about 0.3% in midday trading. Meanwhile, the broad S&P 500 and technology-heavy Nasdaq Composite slipped 0.3% and 0.4%, respectively.

Johnson & Johnson and 3M led the Dow higher by percent change, climbing more than 4% and 2%, respectively. Boeing and Honeywell were the next-biggest gainers, with each adding about 1.4%.

Those jumps overshadowed slides seen elsewhere. Nike was the worst performer in the average with a drop of nearly 2%, followed by Chevron's loss of almost 1%.

Despite Wednesday's outperformance, the Dow has seen the smallest gain of the three major averages compared with the start of 2024.

— Alex Harring

Check out the companies making headlines in midday trading:

• Super Micro Computer — The server vendor dropped 15% after missing revenue expectations for its fiscal third quarter. However, Super Micro beat analysts' expectations for its adjusted earnings and hiked its revenue guidance for its fiscal 2024 year.
• Starbucks — Shares plunged more than 16% after the coffee chain posted weaker-than-expected quarterly results on the top and bottom lines. Starbucks posted adjusted earnings of 68 cents per share on revenue of $8.56 billion. It missed analysts' forecasts of 79 cents per share in earnings and $9.13 billion in revenue, per LSEG.
• New York Community Bank — Shares of the beaten-down regional bank popped more than 31% after CEO Joseph Otting said in a release, "we have a clear path to profitability over the following two years."

For the full list, read here.

— Pia Singh

Short interest in the "Magnificent Seven" stocks climbed to a record $127 billion in April, S3 Partners managing director of predictive analytics Ihor Dusaniwsky said in a report Wednesday.

Bets against the seven (Alphabet, Amazon, Apple, Microsoft, Meta Platforms, Nvidia and Tesla) "will always be high," since they represent "an easy and cheap way to hedge the tech aspect of a portfolio. But the momentum of the market, especially the tech side, does dictate the majority of the variances of short interest on these seven companies," Dusaniwsky said, noting that short interest on the seven averaged $86 billion a month over the past five years but fell as low as $57 billion in 2022.

So far in 2024, investors have made an estimated $5.6 billion shorting Tesla and $2.4 billion going against Apple, according to S3 mark-to-market data. But they have lost $9.8 billion betting the other way against Nvidia, are down $2.3 billion on Meta and off $2.1 billion on Amazon.

Given the past week's rebound in the market, S3 has mostly observed short covering in the group, where investors buy back stock to limit their losses. "We have seen some squeeze related short covering in NVDA which was partially offset with increased short selling in MSFT, AAPL and META," S3 said.

— Scott Schnipper

There have been 300 sessions since the S&P 500 last tumbled more than 2% in one day, according to Strategas.

That stretch of "subdued volatility," as the firm calls it, is nearing levels last seen in 2017, when the broad index went more than 350 sessions without a slide that big. These periods are typically associated with above-average returns, Strategas' Ryan Grabinski told clients in a note.

Still, he said it is a matter of when — and not if — volatility comes back. "The real question is what exactly will the catalyst be for that to happen?" Grabinski said in his Wednesday note.

— Alex Harring

Job openings declined by 325,000 in March, signaling that while hiring is still brisk, demand is decreasing.

The Labor Department's Job Openings and Labor Turnover Survey released Wednesday shows postings declined to a seasonally adjusted 8.49 million, which represented a 0.2 percentage point decrease to 5.1% as a share of total workers. Openings declined more than 1.1 million from a year ago.

That was the lowest level since February 2021 and took the ratio of openings to available workers down to 1.3 to 1, below its 2 to 1 peak in early 2022. Hires and separations also decreased on the month.

— Jeff Cox

Federal Reserve Chair Jerome Powell could take a more hawkish tone in Wednesday's press conference following the central bank's policy meeting, according to Wolfe Research. That would be in line with Powell's more recent comments on inflation after data pointed to persistent pricing pressures.

But the Wall Street firm anticipates that growth and employment will likely have more of an effect on stocks in the intermediate term, the firm's Chris Senyek wrote Wednesday. Wednesday's Fed meeting precedes the April jobs report that is due out Friday.

"We expect the FOMC's statement at 2pm ET and Fed Chair Powell's press conference tone to reflect the committee's hawkish shift two weeks ago," Senyek wrote. "That said, looking out over the intermediate-term, we believe that the growth & employment outlook is likely to have a bigger influence on FOMC's decision making and overall equity market returns."

— Sarah Min

The manufacturing sector returned to a contraction in April, according to a report Wednesday from the Institute for Supply Management that also showed accelerating inflation pressures.

The ISM Manufacturing Index declined to 49.2 for the month, off 1.1 points from March, which was the first time the measure moved above the 50 level that indicates expansion since September 2022. Economists surveyed by Dow Jones had been looking for a reading of 50.1.

Within the survey, the prices index rose to 60.9, a 5.1-point increase and another indication that inflation is proving more intractable than economists and policymakers had been expecting.

— Jeff Cox

CVS Health sank more than 18% on Wednesday and headed for its worst day in nearly 15 years on the back of a disappointing quarter.

The slump came after the drugstore giant's quarterly results fell short of Wall Street's estimates. CVS also slashed its full-year outlook due to elevated medical costs.

If shares close at these levels, CVS will register its worst daily performance since Nov. 5, 2009, when shares tumbled more than 20%. It would also mark the company's third-worst trading day on record.

— Samantha Subin

The S&P 500 and Nasdaq Composite opened lower Wednesday as Wall Street braced for the Federal Reserve's upcoming rate decision.

The broad market index slipped 0.15%, along with the Nasdaq. The Dow Jones Industrial Average added 46 points, or 0.1%

— Samantha Subin

Here are some of the companies making headlines in premarket trading:

• Pfizer — Shares climbed more than 2% after New York City-based Pfizer beat Wall Street's first-quarter revenue forecast and raised its full-year profit guidance.
• CVS Health — Shares tumbled 12% after the drugstore chain and pharmacy benefit manager's first-quarter adjusted earnings and revenue fell short of estimates and it cut its full-year profit outlook, citing higher medical costs.
• Marriott International — The hotel chain slipped about 2% on the heels of weak earnings and current-quarter guidance. Marriott earned $2.13 per share, excluding items, in the first quarter, missing the consensus forecast of $2.17 from analysts polled by LSEG.

Read the full list here.

— Brian Evans

Private payrolls added 192,000 workers in April, according to the latest data from payrolls processing firm ADP.

The figure came in ahead of the 183,000 additions expected by Dow Jones, but below the 208,000 upward revision for March.

— Jeff Cox, Samantha Subin

AMD shares dropped nearly 7% in premarket trading after the chipmaker provided only an in-line forecast for the current quarter.

The company reported first-quarter sales that were slightly ahead of Wall Street expectations, while AMD expects $4 billion in 2024 artificial intelligence chip sales, up from a $3.5 billion forecast in January.

However, since the popular chip stock has already risen 14% in 2024, Tuesday's results were not enough to prevent the stock from sliding.

— Yun Li

Shares of CVS Health fell sharply in premarket trading after a first-quarter report missed Wall Street expectations on the top and bottom lines.

The pharmacy and health-care company reported $1.31 in adjusted earnings per share on $88.44 billion in revenue. Analysts surveyed by LSEG were expecting $1.69 in earnings per share on $89.21 billion in revenue.

The company also cut its full-year guidance for earnings per share and cash flow.

CVS' health-care benefits segment struggled, with its adjusted operating income falling nearly 60% year over year despite an increase in revenue. The company said the decline was due in part to increased Medicare usage.

The stock was down more than 11%.

— Jesse Pound

Pfizer shares gained 2% after the drugmaker surpassed revenue expectations and lifted its profit outlook as it benefits from cost-cutting initiatives and strong sales within its non-Covid segments.

The company reported revenue of $14.88 billion, topping the $14.01 billion expected by analysts polled by LSEG.

For the fiscal year, Pfizer said it expects adjusted earnings to range between $2.15 and $2.35 a share. That is up from its previous guidance of $2.05 to $2.25 per share.

— Samantha Subin, Annika Kim Constantino

The U.K.'s FTSE 100 was 0.2% higher at 8:30 a.m. London time.

Most European bourses are closed for the May Day public holiday. The regional Stoxx 600 index closed lower Tuesday as it clocked its first monthly decline since October.

— Jenni Reid

Tech giant Microsoft announced it will open its first regional data center in Thailand.

The company said it will also build new cloud and artificial intelligence infrastructure in Thailand, as well as provide AI skilling opportunities for more than 100,000 people

Microsoft said the data center region will expand the availability of its hyperscale cloud services, "facilitating enterprise-grade reliability, performance, and compliance with data residency and privacy standards."

— Lim Hui Jie

Japanese trading house Mitsui and Co. reported a 6.4% fall in profit to 1.08 trillion yen, or $6.84 billion, for its 2023 financial year that ended March 31.

Profit before tax came in at 1.3 trillion yen, down 6.7% year on year, while revenue dipped 6.9% to 13.32 trillion yen compared to the same period last year.

Despite the poorer results, shares of the company climbed 1.23% as it also announced a 200 billion yen share buyback from May 2 to Sept. 20.

Mitsui will buy back up to 40 million shares, or 80 million after a share split on July 1.

— Lim Hui Jie

The sudden strengthening of the yen on Monday is likely due to intervention by Japanese authorities, Reuters reported, citing money market data from the Bank of Japan.

Money market data revealed that the central bank's projection for Wednesday's money market conditions indicated a 7.56 trillion yen, or $47.91 billion, net receipt of funds.

Reuters said this compared with a 2.05 billion yen to 2.30 billion yen estimate from money market brokerages that excludes intervention, adding that currency trades take two days to settle.

On Monday, the yen weakened to a 34-year low against the greenback, hitting 160.03 before strengthening to about 155 in the space of a few hours.

— Lim Hui Jie

South Korea posted a 13.8% increase in exports in April, a sharp increase compared to the 3.1% rise in March, according to preliminary estimates by the country's customs service.

The rise also beat the 13.7% increase expected by economists polled by Reuters.

Imports to South Korea climbed 5.4%, less than the 6.2% rise expected and a reversal from the 12.3% fall in March.

As such, the country's trade balance narrowed to $1.53 billion, down from the $4.29 billion recorded in March.

— Lim Hui Jie

Of the 11 sectors within the S&P 500, utilities managed to eke out a narrow gain for this month.

Utilities added 1.6% in April, while the other 10 sectors were in the red. Energy managed a narrow loss of 0.9%, while consumer staples, another defensive category, slipped 1.1%.

The sector's gains were buoyed by NextEra Energy, which advanced 4.8% in April. Consolidated Edison jumped 3.9%, and Dominion Energy gained 3.6%.

Utilities, known for their steady dividends, could come into focus as investors look for income-producing assets to cushion their portfolios during rocky markets. Consider that NextEra Energy touts a dividend yield of 3.1%, while ConEd yields 3.5%.

— Darla Mercado

Bank of America on Tuesday pushed back by six months when it expects the Federal Reserve to start lowering interest rates, to December from June, and revised higher where it thinks the benchmark fed funds rate will end when the Fed is through with the next cycle.

"Following the recent stretch of inflation data that came in firmer than we expected, we revised higher our outlook for inflation in 2024 and, in turn, our outlook for Fed policy," wrote U.S. economist Michael Gapen. "We now expect rate cuts to begin in December, versus June previously, and for the terminal rate in any easing cycle to finish at 3.5%-3.75%, up from 3.0%-3.25% previously."

With the current fed funds rate at 5.25% to 5.50%, Tuesday's move from BofA means the bank is now forecasting no more than seven quarter-point reductions from the Fed, rather than a previous expectation of nine.

"In short, we think the signal from the recent inflation data is that monetary policy will have to be tighter on average over the forecast horizon — not just in 2024 — to bring inflation down to 2.0%," Gapen wrote.

— Scott Schnipper

Check out the companies making headlines in extended trading:

Starbucks — Shares slipped almost 10% in extended trading after the coffee chain missed fiscal second-quarter estimates on the top and bottom lines. Starbucks earned 68 cents per share on revenue of $8.56 billion, and missed the forecast from analysts polled by LSEG of 79 cents per share for earnings and $9.13 billion in revenue.

Pinterest — Shares surged nearly 19% following an earnings and revenue beat in the first quarter. Pinterest reported adjusted earnings of 20 cents per share, topping forecasts for 13 cents per share, according to LSEG. Revenue growth also accelerated in the quarter.

Super Micro Computer — Shares dropped nearly 8% after Super Micro Computer posted fiscal third-quarter revenue of $3.85 billion, missing the $3.95 billion consensus estimate, according to LSEG. Adjusted per-share earnings of $6.65 topped the earnings per share estimate of $5.78. The company also issued strong fourth-quarter revenue guidance.

— Hakyung Kim

Futures tied to the S&P 500 fell Tuesday evening, sliding 0.2%.

Meanwhile, Dow Jones Industrial Average futures traded near the flatline. Nasdaq 100 futures declined 0.4%.

— Hakyung Kim