Stocks end choppy session higher after FOMC minutes

U.S. stocks pushed higher at the close of a choppy session on Wednesday as investors considered a slew of company warnings on the impact of inflation to earnings alongside the Federal Reserve’s latest communications about using their policies to rein in rising prices. The Fed’s May meeting minutes reaffirmed that central bank officials saw additional 50 basis point rate hikes as appropriate over the next couple meetings.

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The S&P 500 wobbled but then gained Wednesday afternoon after the release of the Fed minutes, which also noted that more aggressive tightening and “a restrictive stance of policy may well become appropriate depending on the evolving economic outlook and risks to the outlook.” The Dow and Nasdaq each also rose. Treasury yields mostly declined, and the benchmark 10-year yield fell to hold just above 2.75%.

Investors this week have also eyed a growing list of companies citing the effects that inflation have had and will have on results going forward. Retailers including from Walmart and Target last week to Dick’s Sporting Goods (DKS) and Abercrombie & Fitch (ANF) this week slashed their earnings forecasts for the year as the companies absorbed rising goods and transportation costs. And elsewhere, Snap (SNAP) warned earlier this week that it would post weaker-than-expected sales and profit results this year as the macroeconomic environment “deteriorated further and faster than anticipated.” This was taken as a harbinger of softer results for a bevy of ad-driven tech stocks, sending the Nasdaq Composite to its lowest close since Nov. 2020 on Tuesday.

As the grim company guidance piles up, Wall Street has been looking for signs that the Federal Reserve’s interest rate hikes and monetary policy tightening will achieve bringing down inflationary pressures. The Fed’s minutes from its early May meeting Wednesday afternoon reaffirmed that most monetary policymakers were considering rolling out additional 50 basis point rate hikes at the next two Fed meetings. The Fed raised rates by 50 basis points earlier this month for the first time since 2000, after having raised rates by just 25 basis point earlier this year.

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“The challenge right now is we’re in this new chapter of the inflation story. If you’ll recall, last year it started with whether it’s transitory — turns out, it wasn’t. Then it became about the Fed at the end of last year and earlier this year, whether or not they would tighten significantly. And they did, and now all that’s priced in,” James Liu Clearnomics founder and CEO, told Yahoo Finance Live. “And now what the market is looking at is are basically the fundamentals around how inflation affects corporate profitability and consumer demand.”

And beyond the domestic concerns, a myriad of international concerns — from Russia’s war in Ukraine, to China’s ongoing COVID outbreak — have further infused volatility into the market.

“The Fed can’t really do anything about what’s going on between Russia and Ukraine, they can’t really do anything about China’s COVID zero policies … and a lot of traders are starting to get concerned,” Shawn Cruz, TD Ameritrade head trading strategist, told Yahoo Finance Live.

“The way the market to me is reacting to that, is one, there’s de-leveraging going on. There are some liquidation events out there as well, and that is one of those ‘selling begets more selling’ type of environments. And then the other one is, there’s just not enough confidence out there to come in there and meaningfully put money back to work,” he added. “Once you start to see leverage start going back up, cash coming in from the sidelines, that to me would be an indication that there is at least a little bit more certainty in the outlook for a lot of these people on the sidelines to come back in.”

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4:05 p.m. ET: Stocks end choppy session higher after Fed minutes: Nasdaq gains 1.5%, Dow adds 192 points, or 0.6%

Here were the main moves in markets as of 4:05 p.m. ET:

• S&P 500 (^GSPC): +37.25 (+0.95%) to 3,978.73

• Dow (^DJI): +191.66 (+0.60%) to 32,120.28

• Nasdaq (^IXIC): +170.29 (+1.51%) to 11,434.74

• Crude (CL=F): +$0.97 (+0.88%) to $110.74 a barrel

• Gold (GC=F): -$11.80 (-0.63%) to $1,853.60 per ounce

• 10-year Treasury (^TNX): -1.1 bps to yield 2.7490%

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2:15 p.m. ET: Fed minutes show support for another two half-point rate hikes while adding ‘a restrictive stance of policy’ could become appropriate

The Federal Reserve’s latest meeting minutes Wednesday afternoon reaffirmed Fed Chair Jerome Powell’s prior assertions that the central bank was weighing two more half-point rate hikes.

“Most participants judged that 50 basis point increases in the target range would likely be appropriate at the next couple of meetings,” according to the minutes. “Many participants assessed that the Committee’s previous communications had been helpful in shifting market expectations regarding the policy outlook into better alignment with the Committee’s assessment and had contributed to the tightening of financial conditions.”

The Fed left room for further policy decisions to be informed by incoming data on the economy, which has recently softened. However, it also emphasized that its primary goal remained on bringing down inflation, and that as a result, a “restrictive stance of policy” could be needed.

“Participants agreed that the economic outlook was highly uncertain and that policy decisions should be data dependent and focused on returning inflation to the Committee’s 2% goal while sustaining strong labor market conditions,” the minutes noted. “At present, participants judged that it was important to move expeditiously to a more neutral monetary policy stance. They also noted that a restrictive stance of policy may well become appropriate depending on the evolving economic outlook and the risks to the outlook.”

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11:11 a.m. ET: Stocks extend gains, Nasdaq rises by 1%

Here were the main moves in markets as of 11:11 a.m. ET:

• S&P 500 (^GSPC): +23.35 (+0.59%) to 3,964.83

• Dow (^DJI): +87.30 (+0.27%) to 32,015.92

• Nasdaq (^IXIC): +110.02 (+0.98%) to 11,374.47

• Crude (CL=F): +$0.22 (+0.20%) to $109.99 a barrel

• Gold (GC=F): -$17.20 (-0.92%) to $1,848.20 per ounce

• 10-year Treasury (^TNX): -0.9 bps to yield 2.7510%

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9:31 a.m. ET: Stocks open lower before shaking off losses

Here were the main moves in markets as of 9:31 a.m. ET:

• S&P 500 (^GSPC): -9.53 (-0.24%) to 3,931.95

• Dow (^DJI): -114.27 (-0.36%) to 31,814.35

• Nasdaq (^IXIC): -22.24 (-0.20%) to 11,242.21

• Crude (CL=F): +$0.89 (+0.81%) to $110.66 a barrel

• Gold (GC=F): -$13.90 (-0.75%) to $1,851.50 per ounce

• 10-year Treasury (^TNX): -2.6 bps to yield 2.7340%

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9:12 a.m. ET: Durable goods orders disappoint in April

U.S. durable goods orders decelerated in April and were downwardly revised in March, offering an at least early sign that businesses may be pulling back on investments as economic uncertainties mount.

Orders for durable goods, or manufactured products intended to last at least three years, rose by 0.3% in April compared to March, the Commerce Department said Wednesday. This came in below the 0.6% rate consensus economists were expecting, according to Bloomberg data. In March, durable goods orders rose by 0.6%, with this rate revised down from the 1.1% previously reported.

Non-defense capital goods orders excluding aircraft also missed expectations, rising by 0.3% in April versus the 0.5% anticipated. This metric rose by 1.1% in March, and serves as a closely watched proxy for business investment. Still, non-defense capital goods shipments excluding aircraft, which factors into GDP, rose by a better-than-expected 0.8% last month.

“It’s entirely possible that the recent slowing is nothing more than a temporary reaction to the spike in energy prices; firms might be waiting to see how consumers respond,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in an email about the report. “So far, we see no evidence of any hit — housing excepted — but we also can’t rule out the idea higher rates are directly causing some capex [capital expenditures] to be deferred, even though firms are sitting on huge piles of cash accumulated during the pandemic.”

“For now, a decent increase in capital spending on equipment in the second quarter seems assured, given the lags from previous strength in orders, but the outlook for H2 has become a bit more cloudy,” he added.

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7:55 a.m. ET: Dick’s Sporting Goods becomes latest retailer to slash full-year outlook given ‘evolving macroeconomic conditions’

Dick’s Sporting Goods shares sank by more than 14% Wednesday morning after the retailer became one of the latest to lower its full-year earnings and sales guidance as economic uncertainty resurged.

The sporting goods retailer said it now sees adjusted earnings totaling between $9.15 and $11.70 per share for the 2023 fiscal year, with this range coming in well below the $11.70 to $13.10 a share seen previously. Comparable store sales will likely fall between 2% and 8% this year, the company added, compared to a prior outlook for sales to come in between unchanged and down 4%. Dick’s Sporting Goods said it updated its outlook “to reflect the impact of evolving macroeconomic conditions,” according to its earnings release Wednesday morning.

Following the release, the stock was on track to post a sixth straight day of losses, or its longest losing streak since early Dec. 2021, as shares fell in sympathy with other major retailers over the past week.

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7:23 a.m. ET: Stock futures edge lower

Here’s where markets were trading Wednesday morning:

• S&P 500 futures (ES=F): -5.25 points (-0.13%) to 3,935.25

• Dow futures (YM=F): -55 points (-0.17%) to 31,825.00

• Nasdaq futures (NQ=F): -9.5 points (-0.08%) to 11,761.50

• Crude (CL=F): +$1.47 (+1.34%) to $111.24

• Gold (GC=F): -$14.10 (-0.76%) to $1,851.30 per ounce

• 10-year Treasury (^TNX): -2.6 bps to yield 2.734%

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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter.

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