The Dow Jones Industrial Average experienced a decline on Wednesday following comments from Federal Reserve Chair Jerome Powell during a European Central Bank forum in Portugal. Powell cautioned about the possibility of two additional rate hikes this year. Meanwhile, Advanced Micro Devices (AMD) and Nvidia (NVDA), two major chip manufacturers, faced a sell-off as the Wall Street Journal reported that the Biden administration was contemplating imposing new restrictions on exports of artificial intelligence chips to China.
Powell participated in a discussion at the European Central Bank that mainly centered around managing inflation. He reiterated the expectations of most policymakers for two more rate hikes in the coming months. Later in the day, Powell engaged in a public chat with the governor of the Bank of Spain.
Although the Federal Reserve recently refrained from implementing a rate hike, it indicated that the key interest rate would likely rise in July and subsequent meetings. Consequently, investors currently perceive a more than 74% chance of a rate hike in the upcoming July meeting.
Early on Wednesday, AeroVironment (AVAV), General Mills (GIS), and Jefferies (JEF) were noteworthy companies in terms of earnings movement. AVAV stock surged by over 6%, while General Mills experienced a decline of 4.4% in morning trade. Jefferies’ stock rose by 1% during early trading.
In contrast, AMD and Nvidia encountered a downward trend, with AMD stock sliding over 2% and Nvidia shares dropping by 2.1% in early trade. On a positive note, electric vehicle giant Tesla (TSLA) witnessed a 2.1% increase on Wednesday morning, following a rebound the previous day.
In the technology sector, Apple (AAPL) and Microsoft (MSFT), the Dow Jones tech giants, displayed mixed performance following the stock market’s opening.
Other notable leaders in the stock market rally included Alphabet (GOOGL) and Meta Platforms (META). Google’s stock fell by 0.9%, while Meta’s shares lost 0.6% during morning trade.
Amid the ongoing stock market pullback, Chipotle Mexican Grill (CMG), McKesson (MCK), MongoDB (MDB), and Lam Research (LRCX), as well as Dow Jones stocks JPMorgan Chase (JPM), Merck (MRK), and Salesforce (CRM), emerged as some of the best stocks to observe.
Tesla is featured as an IBD Leaderboard stock, while Floor & Decor maintains its position as an IBD SwingTrader stock. MongoDB is also highlighted in this week’s Stocks Near A Buy Zone column.
Market Overview: Impact of Oil Prices and Treasury Yields
After the opening bell on Wednesday, the Dow Jones Industrial Average experienced a 0.4% decline, accompanied by a 0.35% loss in the S&P 500. The tech-heavy Nasdaq composite dropped 0.2% in morning trading.
Among the U.S. exchange-traded funds, the Nasdaq 100 tracker Invesco QQQ Trust (QQQ) witnessed a 0.5% decrease, while the SPDR S&P 500 ETF (SPY) declined by 0.3% early in the day.
The 10-year U.S. Treasury yield slightly decreased to 3.74%. The yield has been fluctuating between 3.57% and 3.85% in recent times, with a settlement at 3.76% on Tuesday.
Following Tuesday’s losses, oil prices moderately rebounded on Wednesday morning while remaining close to their recent lows. West Texas Intermediate futures increased by 0.5% to approximately $68 per barrel.
Market Performance on Tuesday
On Tuesday, the Dow Jones Industrial Average rose by 0.6%, and the S&P 500 gained 1.15%. The tech-heavy Nasdaq composite experienced a notable advance of 1.65%.
In the Big Picture column published on Tuesday, it was noted that the market’s show of strength following a recent pullback was encouraging. The Nasdaq composite displayed a significant 1.7% gain, rebounding from its 21-day exponential moving average and coming close to the 10-day line.
As the stock market undergoes a pullback while remaining in an uptrend, it is crucial to read IBD’s The Big Picture column for important insights and analysis.
During this period of the stock market pullback, investors are closely monitoring the developments in oil prices and Treasury yields. While the Dow Jones Industrial Average, S&P 500, and Nasdaq composite experienced declines in morning trading, the market remains dynamic.
Tuesday’s market performance saw a positive trend, with the Nasdaq composite showing particular strength. It climbed by 1.7%, demonstrating a rebound from the recent pullback. Investors are advised to stay informed by following IBD’s The Big Picture column, which provides valuable analysis and guidance as the market continues to fluctuate.
As the day progresses, market participants will be watching for further updates on economic indicators and any significant news that may impact market sentiment and stock performance.
