Stock Market Today: Fed Selloff Eases, Lowe's Slips, and Albemarle Sinks - Barron's

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The Federal Reserve's decisions seem to have been largely priced in.

After two days of selling, the stock market hopes it’s ready for Wednesday’s Federal Reserve rate decision.

Shortly after the open, the Dow Jones Industrial Average was down 103 points, or 0.3%, while the Nasdaq Composite and S&P 500 were off 0.2%. It’s a relative yawner compared with the selling that occurred on Monday and Tuesday.

The Federal Open Market Committee (FOMC) is expected to speed up the phasing out of the central bank’s Covid-19 pandemic-era asset-buying program, and is likely to signal that interest-rate increases will happen earlier than expected next year.

Investors will also scrutinize Fed Chair Jerome Powell’s words during his media conference after the meeting. A more dovish message than what markets expect would take investors by surprise. That could happen if, for example, the central bank considered that the Omicron coronavirus variant could have worse consequences for the recovery than generally expected.

“[The] biggest risk to equities remains a more hawkish shift in tone with a faster than anticipated acceleration in tapering of QE and any hints at more than two rate hikes next year,” writes the Sevens Reports’ Tom Essaye.

With all the recent volatility in the stock market—particularly in the tech-heavy Nasdaq—it’s possible that a lot of the Fed’s decision has been priced in. “Equities were again weak on Tuesday, as investors remain on a buyers strike in front of the FOMC meeting,” wrote Fundstrat’s Tom Lee. “[We think this buyers strike in front of FOMC could turn into a ‘buy the event.'”

Not everyone is convinced. “I would not do ‘anything’ until we see what the Fed does today,” said B. Riley’s Mark Grant.

Wednesday’s economic data just muddy the waters. Retail sales rose just 0.3% in November from October, down from 1.8% and missing forecasts for a 0.8% increase. Import prices rose 0.7% month-over-month, faster than the 0.5% expected, though down from 1.6% in October. “Overall, it was a disappointing round of data to start Fed-day,” wrote BMO’s Ian Lyngen.

The Fed isn’t the only central bank meeting this week. The Bank of England and European Central Bank will hold similar, important policy-setting meetings Thursday. European markets seem to be handling the risk well on Wednesday, however, with the pan-European Stoxx 600 index up 0.2% and France’s CAC40 index up 0.3% in afternoon trading.

Asian stock markets ended the day in the red, with the Hang Seng Index down 0.9% and the Shanghai Composite falling by 0.4%.

Here are seven stocks on the move Wednesday:

Eli Lilly (ticker: LLY) gained 6.9% after offering above-consensus earnings and sales guidance for both 2021 and 2022.

Six Flags Entertainment (SIX) rose 1.9% after getting upgraded to Buy from Neutral at Goldman Sachs.

Albemarle (ALB) slumped 3.7% after getting cut to Sell from Neutral at Goldman Sachs.

Lowe’s (LOW) rose 0.4% after offering disappointing 2022 guidance ahead of its investor day.

Regeneron Pharmaceuticals (REGN) slipped 2.5% after getting cut to Market Perform from Outperform at Bernstein.

Cineworld (CINE.U.K), the world’s second-largest movie-theater operator and Regal owner, was sinking 27% Wednesday, after a Canadian court ruled that the London-listed group had to pay some $957 million to rival Cineplex after giving up on a takeover plan.

Shares in Inditex (ITX.Spain), the world’s largest fashion retailer and owner of the Zara brand, were down 3.6% after the group unveiled a doubling of its online sales in 2020, but disappointed analysts with margins weaker than expected.

Write to Pierre Briançon at pierre.briancon@dowjones.com

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Stock Market Today: Fed Selloff Eases, Lowe's Slips, and Albemarle Sinks - Barron's
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