The S&P 500 and Nasdaq Composite closed lower Wednesday, with the broad market index fluctuating near its highest closing levels since August 2022.
The S&P 500 ticked down 0.38% to close at 4,267.52, and the Nasdaq Composite declined 1.29% to end at 13,104.89. The Dow Jones Industrial Average, the outlier among the major averages, added 91.74 points, or 0.27%, closing at 33,665.02.
Energy was the best-performing S&P 500 sector, rising about 2.6%. The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) and First Trust Natural Gas ETF (FCG) added more than 3% each.
Regional banks saw their share gains continue as the SPDR S&P Regional Banking ETF (KRE) rose more than 3%. Shares of PacWest Bancorp jumped 14.4%, while Zions Bancorporation added 4.5%.
Stocks have been boosted recently as the promise of artificial intelligence lifts tech names. Over the past three months, the S&P 500 is up more than 7%.
However, Crossmark Global Investments chief investment officer Bob Doll warned that despite the market rally in recent days, more impact from the Federal Reserve's interest rate hikes will likely be felt in the future.
"We still have leading economic indicators down 13-months in a row. We still have an inverted yield curve [and] liquidity issues," Doll told CNBC's "Squawk on the Street" on Wednesday.
"I think they're more there's more impact to come. … I would be a little cautious [and] not long-route rallies," he said.
The U.S. trade deficit continued to increase in April, but came in slightly below economists' expectations. The deficit could translate into lower GDP growth for the second quarter.
Correction: The SPDR S&P Regional Banking ETF was positive for the fourth session out of the past five. An earlier version misstated the number of consecutive winning days.
The Cboe Volatility Index, aka the VIX, briefly touched 13.77 on Wednesday, the lowest since Wall Street's so-called "fear gauge" reached an intraday low of 13.38 on Feb. 14, 2020 — one month before the U.S. entered lockdown due to Covid.
The index suggests investors aren't overly concerned about an earnings slump, elevated interest rates, an imminent U.S. recession, an estimated $1 trillion in Treasury bill issuance, air quality in New York City or much else.
-Scott Schnipper
The S&P 500 Industrials Index rallied Wednesday to the highest since shortly before Silicon Valley Bank failed on March 10, another sign that recent stock market strength may finally be widening beyond the usual technology and AI suspects. The move may also reflect the view that the U.S. economy could potentially dodge a recession.
Late Wednesday, the S&P 500 Industrials were ahead 1.5% against the S&P 500's 0.3% decline. It was the group's highest level since March 8, just two days prior to the failure of Silicon Valley Bank.
The S&P 500 Industrials now stand less than 1.4% below their 52-week high set in February, and are almost 6% higher in June alone. The 14-day relative strength index (RSI) for the group is a shade more than 62 — well below the 70 threshold that might signal it's overbought.
Among the stocks posting some of the largest gains Wednesday were Stanley Black & Decker and United Rentals, which gained 6.1% and 4.4%, respectively. Caterpillar, Carrier Global and Nordson also rose by more than 3%.
— Scott Schnipper
With the market showing signs of more resilience than many had expected earlier this year, investors can take a less-defensive stance, said U.S. Bank Wealth Management's senior investment strategist Tom Hainlin.
"[We're] witnessing the change in market leadership — it used to be pretty narrow, a handful of large tech companies. Today we're seeing small caps up another 2% [and] strength in areas like financials. Watching that performance broaden now has been a factor in us moving to a more neutral outlook now for the weeks and months ahead," Hainlin said.
"So we started the year being slightly cautious. We thought clients should have a little bit less than stocks, and a little more in things like utilities. And we just recently shifted that to where clients should just be allocated to what their normal long-term investment allocations are, between stocks and bonds, and things like real estate," Hainlin continued.
— Hakyung Kim
During what has been a strong day for small-cap names, mega-cap stocks have underperformed the market.
Shares of tech giants Microsoft and Google pared down 2.7% and 3.3%, respectively. Several semiconductor names also saw shares pull back after rallying the previous week. Nvidia lost 1.1%, while Qualcomm shares fell 1.2%.
Financial services companies Visa and Mastercard dropped 1.5% and 2.2%, respectively.
— Hakyung Kim
The Russell 2000 is up 1.7% Wednesday and almost 8% month to date, giving signs that the economy is strong than many investors had initially expected, according to LPL Financial's chief global strategist Quincy Krosby.
"Small-caps have traditionally served as a bellwether in terms of the broader economic landscape. With all the ongoing debate regarding the state of the economy, and concerns about an impending recession, steady interest in small-caps suggests the economy is more resilient than the headlines imply, or that a recession could be milder than initially projected," Krosby said in a Wednesday note.
"The market tends to 'get the news first,' and if flows into the Russell 2000 advance, this could be a significant market signal," Krosby added.
— Hakyung Kim
Check out the companies making the biggest moves midday:
Affirm — Shares of the payments company surged 6% after Affirm and Amazon announced a new compatibility feature. Affirm's Adaptive Checkout, which offers customers pay-over-time plans, will now be a payment option through merchants offering Amazon Pay.
Warner Bros Discovery — Shares popped 5% following the announcement that CNN CEO Chris Licht is leaving the company after a tumultuous reign of just over a year.
Dave & Buster's — Shares of the entertainment giant jumped 18% a day after Dave & Buster's posted a beat on earnings. The company reported first-quarter earnings of $1.45 per share, while analysts polled by Refinitiv called for $1.24 per share. Revenue fell short of expectations, however, coming in at $597 million, versus the $602 million estimated by Wall Street.
GameStop — The meme stock added 3.6% ahead of its quarterly results following Wednesday's close. Analysts polled by FactSet are forecasting a quarterly loss of 15 cents per share.
The full list can be found here.
— Hakyung Kim
Shares of Warner Bros Discovery rallied nearly 5% in midday trading after CNN announced CEO Chris Licht was leaving.
CNN, which is owned by Warner Bros Discovery, said Licht was out after a rocky year at the helm that included criticism over the network's town hall with former president Donald Trump. He was also facing a rebellion among the talent and staff.
— Michelle Fox
The SPDR S&P Regional Bank ETF (KRE) has gained more than 2% on Wednesday and is on track for its fourth positive day in five.
After selling off dramatically earlier this year after some mid-sized banks like Silicon Valley Bank failed, regional bank stocks appear to have stabilized.
PacWest Bancorp was one of the biggest winners of the day, with the stock jumping 15%.
— Jesse Pound
Amazon is planning to create ad-supported subscription tiers for Prime Video, according to a report from the WSJ. The move would come as other competitor streaming services also create ad-supported tiers to generate more revenue for their streaming services.
The company is also in talks with Paramount Global and Warner Bros Discovery to potentially add the ad-based tiers of their streaming services onto Prime Video Channels, per the report.
Amazon shares were down more than 3% Wednesday afternoon.
— Hakyung Kim
The mountain-high valuations seen in the technology sector during this new artificial intelligence wave, don't look so "extreme" when looking at previous innovation waves.
"The relative forward-P/Es of today's AI leadership are still a far cry from what was seen at the peaks of past innovation waves," wrote Empirical Research Partners' Michael Goldstein in a Tuesday note." In fact, they sit close to the level reached a year before the tops."
Read more on Goldstein's research here.
— Samantha Subin
The S&P 500 is a stone's throw from its last 52-week high of 4,325.28, established on Aug. 16. The tech and energy sectors have been leading the index higher since then. At about noon in New York, the index traded around 4,275.
Since the S&P 500's last 52-week high and close above 4,300, tech has gained 10%, while energy is up 7%. Other notable corners of the market include the iShares US Home Construction ETF (ITB), up more than 26%, and the VanEck Semiconductor ETF (SMH), which has gained 20% since Aug. 16.
Standout performers within the S&P 500 since Aug. 16 include Royal Caribbean, which has added 107% since then, and Nvidia, up about 105%. Netflix, First Solar and PulteGroup have each added more than 60% in that period.
-Darla Mercado, Gina Francolla
The S&P 500 is languishing, but small-cap stocks and an equal-weighted version of the S&P 500 are doing well — signaling the narrow market rally seen on the Street may be broadening out.
The Russell 2000, which tracks small caps, rose more than 1% on the day, adding to its 2.7% surge from Tuesday. The Invesco S&P 500 Equal Weight ETF (RSP), meanwhile, climbed 0.6%.
— Fred Imbert
With markets expecting the Federal Reserve to announce a rate hike pause during its next meeting June 13–14, CFRA Research's chief investment strategist Sam Stovall says the markets could see a boost.
The CME FedWatch Tool projects a 62.1% probability of the central bank maintaining its current target rate, as of Wednesday afternoon.
"Historically, in the period between FOMC meetings after which the Fed did decide to skip a rate hiking cycle, the market was up 88% of the time 14 of 16 times and the average eight months gain was 3.6%," Stovall said.
"So I think that investors will be pleased once again, if we do end up seeing the Fed, hold off on raising rates again," he added.
— Hakyung Kim
Morgan Stanley views Match Group as a big beneficiary of continued online dating growth.
"Contrary to bear case concerns centered on US online dating saturation and 'swipe fatigue', our April AlphaWise survey shows demand for online dating increasing (+9 pts since Sept) with continued penetration gains," wrote analyst Lauren Schenk in a Tuesday note, calling the stock a top pick in the space.
Match-owned Tinder already captures 60% of younger, Gen-Z users, and 41% of overall market share, according to the survey. Data also suggests daters plan to up their usage substantially over the next year.
"With positive user traction, but poor investor sentiment, we see opportunity for multiple expansion in the back half," she wrote.
— Samantha Subin
Piper Sandler expects more upside in store for Amazon as the setup within its retail and AWS units improves.
"AI has become an even greater talking point following the recent NVDA print," wrote analyst Thomas Champion in a Wednesday note to clients. "While there are puts & takes on AWS's AI capabilities, a revenue growth trough seems near."
Given this setup, Champion lifted 2024 estimates for the AWS unit and hiked his price target on Amazon shares to $150, reflecting more than 18% upside from Tuesday's close.
He expects revenue to bottom out during the second half of this year.
— Samantha Subin
Affirm shares surged 19% during midday trading. The move comes after Amazon and Affirm said Wednesday that Amazon Pay is adding Affirm's flexible payment option to checkout. Affirm allows shoppers to buy now and make payments over time.
Meanwhile, Amazon shares were lower by 1.7%.
— Sarah Min
The S&P Regional Banking ETF (KRE) closed above its 50 day moving average during the last three trading sessions. This marks the first time since late February and early March, or prior to the onset of the regional banking crisis, according to Bespoke Investment Group.
The KRE is trading 2.4% higher Wednesday.
— Hakyung Kim
The S&P 500 is trading up 0.2% at 4,292.86 as of 10:11 a.m. ET. The broad market index last reached the 4,300 mark on a intraday basis on Aug. 17, 2022, when it hit a high of 4,302.18.
The 52-week high for the S&P 500 is 4,325.28 from Aug. 16, 2022.
— Hakyung Kim, Gina Francolla
Canaccord Genuity Analyst George Gianarikas began coverage of Mobileye Global with a buy rating, and a $50 price target, saying the self-driving technology firm is a leader in its field. The stock was up 1% in Wednesday premarket trading.
"We believe autonomous vehicles (AVs) are set to increase resource utilization, improve productivity, save lives, and much more," Gianarikas wrote Wednesday. "We see vehicle autonomy as one of the highest value-creating technologies to be deployed. Ever."
— Sarah Min
The Dow and S&P 500 were up slightly to start the session, while the Nasdaq Composite climbed 0.4%.
— Fred Imbert