June 5, 2023

Live stock market updates: Stocks fall as investors await Fed decision, Powell hints

US stocks fell on Wednesday as Wall Street braced for the Federal Reserve’s expected policy announcement and related remarks from Chairman Jerome Powell.

The US Federal Reserve is widely expected to raise its short-term key interest rate by 0.75% for the fourth straight time after its two-day meeting ends at 2pm ET.

The S&P 500 (^GSPC) was down 0.6% in midday trading, while the Dow Jones Industrial Average (^DJI) was down about 0.2%. The tech-heavy Nasdaq Composite (^IXIC) fell 1%.

Treasury yields rose along with stocks. The benchmark 10-year loan remained at more than 4 percent, while the interest-sensitive two-year yields hovered around 4.5 percent.

On the economic data front, U.S. private payrolls rose unexpectedly in October, according to ADP’s national employment report, which serves as an incomplete curtain raiser to the government’s monthly employment report due out on Friday. Data on Wednesday suggested the labor market remains tight despite the Fed’s efforts to rein in growth against inflation, pointing to aggressive rate hikes.

Investors are tuning in to Powell’s press conference at 2:30 PM ET after the rate decision, which is expected to come along with policymakers’ economic forecasts and the latest dot chart showing each member’s forecast for US short-term interest rates.

“The focus is on what comes next, and we expect Chairman Powell to hint that the Federal Open Market Committee is likely to cut rates to 50 basis points in December,” Goldman Sachs economists led by Jan Hatzius said in a recent note.

Any signals from the central bank about a potential slowdown in tightening served as a tailwind for the major indexes, which ended last month higher than expected on talk from some officials that points to a slowdown in rate hikes. global concern that tightening could cause economic instability. However, some strategists have resisted the idea that there is an immediate change in the Fed’s path, with inflation and payrolls still high.

“Currently, the inflation and labor market criteria have not been met, so Mr. Powell cannot pre-announce his intention to move to a slower rate hike without contradicting what he said just six weeks ago,” Ian Shepherdson, chief economist at Pantheon Economics, said in an emailed statement. in the comments. “There is plenty of evidence of easing pressure in the pipeline, but it has not yet reached the numbers that the Fed chairman has made clear on several occasions, namely real core inflation data.”

WASHINGTON, DC – OCTOBER 3: US Federal Reserve Chairman Jerome Powell listens during a meeting with the US Treasury Department on October 3, 2022 in Washington DC. (Photo by Anna Moneymaker/Getty Images)

On the corporate side, shares of Estée Lauder ( EL ) fell more than 7% after the company cut its full-year forecast. The cosmetics maker cited currency headwinds, China’s shutdown and some U.S. retailers removing its cosmetics and fragrances from their shelves amid worries about slowing demand.

Shares of Paramount ( PARA ) fell as much as 12% after the company announced investments in content and weak ad revenue also weighed on the quarter.

Shares of Advanced Micro Devices ( AMD ) rose 3% after the chipmaker reported better-than-expected earnings, although guidance for fourth-quarter revenue fell short of Wall Street estimates.

The Tinder dating app can be seen on a mobile phone in this photo taken on September 1, 2020.  Photo taken on September 1, 2020.  REUTERS/Akhtar Soomro/Photo

The Tinder dating app can be seen on a mobile phone in this photo taken on September 1, 2020. Photo taken on September 1, 2020. REUTERS/Akhtar Soomro/Photo

Shares of Tinder, Hinge and OkCupid owner Match Group ( MTCH ) rose 5% after financial numbers showed revenue that beat analysts’ forecasts and the company vowed to control costs to brace for lackluster financial expectations.

Shares of Mondelez International ( MDLZ ) rose 2% after the Oreo maker raised its full-year sales and earnings outlook and said shoppers have continued to indulge in snacks and beverages despite a lack of inflation.

Meanwhile, shares of Airbnb ( ABNB ) fell nearly 10% after the company warned of slowing fourth-quarter growth as consumers soured on higher rental prices and favored urban and cross-border destinations.

Alexandra Semenova is a reporter for Yahoo Finance. Follow him on Twitter @alexandraandnyc

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