Stock market news live updates: Stocks struggle for direction before Fed decision
Stocks traded mixed Wednesday as investors looked ahead to a key monetary policy decision from the Federal Reserve.
The S&P 500 hugged the flat line A day earlier, the three major U.S. stock indexes closed out the session lower, with both the S&P 500 and Nasdaq pulling back from record highs logged earlier this week. Treasury yields were mostly lower, and the benchmark 10-year yield hovered around 1.49%.
Traders are anxiously awaiting the conclusion of the Federal Reserve's latest monetary policy meeting, which will culminate with a policy statement Wednesday afternoon and a press conference from Federal Reserve Chair Jerome Powell. Both come at a critical juncture in the U.S. economic recovery, with economic activity accelerating and producing inflationary pressures that some market participants believe may warrant a nearer-term shift to monetary policy than the central bank has currently telegraphed.
On Tuesday, new economic data showed producer prices surged at the fastest year-on-year rate on record, with inflationary pressures reverberating across the supply chain as demand picks up. The data added to a spate of other readings corroborating these rising prices, with both the core consumer price index and core personal consumption expenditures at a near 30-year high in May.
"I do think this impulse of inflation, although transitory, is going to be much higher than the Fed and market participants are expecting right now. I'm expecting some more hotter inflation data, but ultimately those pressures ease as we get into 2022." Jeff Schulze, investment strategist at ClearBridge Investments, told Yahoo Finance. He added he expects the Fed to begin laying out a path toward tapering its asset purchase program as soon as August or September, but that actual tapering will likely not ultimately begin until next year.
For now, the Federal Reserve has continued its quantitative easing with asset purchases taking place at a rate of $120 billion per month and kept interest rates near zero, and has maintained that it believes inflation pressures will prove transitory. Wednesday's meeting will also come with an updated Summary of Economic Projections, or dot plot, from the Fed, which may should changes to their median projections for economic growth and the timing for a rate hike. The Fed's latest dot plot signaled it would keep rates on hold near zero through at least 2023.
"The reopening of the economy has continued as COVID cases have dropped, and all the near-real-time indicators of economic activity have improved markedly," Ian Shepherdson, chief economist for Pantheon Macroeconomics, wrote in a note Tuesday. "Unemployment, however, remains elevated, despite some 3.5 million people still absent from the labor force, compared to the pre-COVID level."
"The Fed, in short, is not yet in a position to declare that 'substantial further progress' — the test for beginning to taper its asset purchases — has been made," he added. "The question for markets and Chair Powell [Wednesday], though, is whether sufficient progress-towards-progress has been made to allow the Fed to start talking about tapering."
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10:13 a.m. ET: Tech stocks outperform, Microsoft rises to highest level since April
Technology stocks were the major outperformers during Wednesday's session, with the move higher coinciding with a drop in Treasury yields ahead of the Federal Reserve's June policy decision.
The health care and information technology sectors outperformed in the S&P 500. Shares of Microsoft (MSFT) and Apple (AAPL) outperformed in the Dow alongside Merck (MRK) and Amgen (AMGN).
Microsoft shares rose to their highest level since April 37 intraday on Wednesday, bringing the tech giant within striking distance of a $2 trillion market capitalization. The company is nearing the launch of its next generation of Windows on June 24. Apple and Amazon (AMZN) shares each touched their highest levels since early May.
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10:00 a.m. ET: Oracle shares sink 6% after strong fiscal 4Q results fail to impress Wall Street
Technology service provider Oracle (ORCL) posted fiscal fourth-quarter results that beat estimates late Tuesday, but the stock sold off as the print and guidance ultimately failed to wow Wall Street.
Adjusted revenue grew 8% to $11.23 billion during the three months ended May 31, beating estimates for $11.04 billion, based on Bloomberg consensus data. This was in turn led by a beat in the company's cloud services and license support unit – its largest by sales – with revenue there growing 66% to $7.39 billion. Adjusted earnings per share of $1.54 were ahead of the $1.31 expected.
Oracle CEO Safra Catz said during the company's conference call that Oracle expects revenue growth to increase by mid-single digits for fiscal 2022, largely driven by Oracle's cloud business. The company also expects to double its cloud capital expenditures spending for the current fiscal year to nearly $4 billion, Catz added.
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9:30 a.m. ET: Stocks open mixed ahead of Fed decision
Here's where markets were trading shortly after the opening bell Wednesday morning:
S&P 500 (^GSPC): +0.75 (+0.02%) to 4,247.25
Dow (^DJI): -20 (-0.06%) to 34,268.00
Nasdaq (^IXIC): +22.75 (+0.16%) to 14,053.00
Crude (CL=F): -$0.05 (-0.07%) to $72.07 a barrel
Gold (GC=F): +$2.60 (+0.14%) to $1,859.00 per ounce
10-year Treasury (^TNX): -0.8 bps to yield 1.491%
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8:51 a.m. ET: Housing starts rise less than expected in May; building permits slump
Housing starts rose at a slower-than-expected rate in May while builders permits slumped, with tight inventory levels and rising prices weighing further on housing market activity.
Housing starts rose 3.6% to a seasonally adjusted annualized rate of 1.572 million in May, the Commerce Department said Wednesday. This followed a 12.1% drop in April, which was revised down from the 9.5% decrease previously reported.
Building permits, meanwhile, fell 3% to a seasonally adjusted annualized rate of 1.681 million. This was a bigger decrease than the 0.2% expected, and followed a drop of 1.3% in April. April's decline was previously reported as a 0.3% increase.
"The latest batch or residential housing construction data won’t be music to Fed officials’ ears as they meet today," Chris Rupkey, chief economist for Fwdbonds, wrote in an email Wednesday morning. "There is not enough construction of single-family homes to alleviate the housing shortage in America and despite real GDP of nearly 10% this quarter this is one economic sector that isn’t growing fast enough. There are 332 million Americans and not nearly enough homes to put them all in which means the housing price bubble will continue to worsen."
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7:24 a.m. ET Wednesday: Stock futures trade mixed
Here's where markets were trading Wednesday morning:
S&P 500 futures (ES=F): 4,244.50, -2 points (-0.05%)
Dow futures (YM=F): 34,236.00, -52 points (-0.15%)
Nasdaq futures (NQ=F): 14,042.00, +11.75 points (+0.08%)
Crude (CL=F): +$0.25 (+0.35%) to $72.37 a barrel
Gold (GC=F): +$0.70 (+0.04%) to $1,857.10 per ounce
10-year Treasury (^TNX): -0.8 bps to yield 1.491%
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6:20 p.m. ET Tuesday: Stock futures drift higher
Here's where markets were trading Tuesday evening:
S&P 500 futures (ES=F): 4,249.25, +2.75 points (+0.06%)
Dow futures (YM=F): 34,306.00, +18 points (+0.05%)
Nasdaq futures (NQ=F): 14,046.75, +16.5 points (+0.12%)
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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