Stock Market Today: Dow Holds Near Records, the Fed Meets, Zillow Slumps - Barron's

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Fed Chair Jerome Powell's press conference Wednesday afternoon will be closely watched.

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The Dow Jones Industrial Average was slightly lower Wednesday morning after closing at a record high Tuesday as markets await the Federal Reserve’s monetary policy decision.

Shortly after the open, the Dow was off 41 points, or 0.1%, after the blue-chip benchmark closed above 36,000 for the first time. The S&P 500 fell 0.1%, while the Nasdaq Composite slipped 0.2%. All three indexes ended Tuesday at new all-time highs.

Today the spotlight is squarely on the Federal Open Market Committee (FOMC)—the Federal Reserve’s monetary-policy body. Its monthly meeting got under way Tuesday and will wrap up Wednesday with a statement from Fed Chair Jerome Powell.

“Stock futures are little changed near record highs as a sense of Fed paralysis grips the markets ahead of the FOMC announcement today,” wrote Tom Essaye, founder of Sevens Report Research. 

It’s largely expected that the central bank will announce that it will start slowing, or tapering, its Covid-19 pandemic-era program of monthly asset purchases, which add liquidity to markets. The Fed has been buying $120 billion in bonds to keep their prices high and yields low since June 2020, when it settled into a steady pattern after more fervent bond-buying near the beginning of the pandemic.

Markets now largely expect that the Fed will begin slowing these purchases, which consist of Treasury securities and agency mortgage-backed securities, at a rate of about $15 billion a month, starting this month. If the central bank announces a faster pace, investors could react negatively, and it could put pressure on stocks.

The larger risk is that the Fed could indicate that it is considering short-term interest rate hikes sooner rather than later. With inflation running hot and economic growth slowing, an indication of a rate hike too soon could also cause a selloff in stocks.

As the Fed looms, not even solid economic data could move stocks higher. The ADP jobs report showed that the U.S. added 571,000 private-sector jobs in October, above the consensus forecast for 395,000. 

Also read: Is Inflation Here to Stay? The Data Are Cause for Worry. The Fed Will Have its Say Today

Overseas, Hong Kong’s Hang Seng Index slipped 0.3% as investors in Asia tread water ahead of the FOMC meeting. The pan-European Stoxx 600 was up 0.1% as investors in Europe adopted a similar wait-and-see attitude.

In commodity markets, oil prices fell back amid indications that U.S. crude supply is higher than expected and pressure on the OPEC+ group of national producers to ramp up production.

Futures contracts for international benchmark Brent crude were down 1.5% to around $83.40 a barrel, after highs above $85 this week. U.S. futures for West Texas Intermediate crude were similarly down to around $82.30 after trading near $85 earlier in the week—the highest levels since late 2014.

Analysts cited data from the American Petroleum Institute Tuesday showing that U.S. crude inventories jumped by 3.6 million barrels last week—far more than the 1.5 million estimated—in a surprise to supply expectations. That puts the spotlight on official data Wednesday from the U.S. Energy Information Administration.

Here are five stocks on the move Wednesday:

Lyft (ticker: LYFT) stock gained 13% after the company’s earnings report showed a more than 50% rise in adjusted earnings before interest, tax and non-cash expenses. Sales were $864 million, above expectations for $863 million.

Lyft’s results helped rival Uber (UBER) stock rise 4.9% ahead of its Thursday earnings report.

Bed Bath & Beyond (BBBY) stock gained 36% after the company announced a partnership with Kroger (KR) to sell certain products at the grocer’s locations and through online channels. Still, the Bed Bath & Beyond stock is also benefiting from its status as a “meme stock,” so the initial buying has forced short-sellers to buy shares back.

Shake Shack (SHAK) stock gained 2.1% after getting upgraded to Buy from Neutral at Northcoast.

CVS Health (CVS) stock rose 2.9% after the company reported a profit of $1.97 a share, beating estimates of $1.78 a share, on sales of $73.8 billion, above expectations for $70.5 billion.

Write to Jacob Sonenshine at jacob.sonenshine@barrons.com

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Stock Market Today: Dow Holds Near Records, the Fed Meets, Zillow Slumps - Barron's
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