Stocks on Wall Street were not showing a clear direction on Wednesday as investors awaited news from the Federal Reserve regarding interest rates. The S&P 500 was down 0.3%, while the Dow Jones Industrial Average was up 0.1% and the Nasdaq composite was 0.3% lower. CVS Health shares tumbled 19.1% after reporting weaker results for the quarter, citing increased costs in its Medicare Advantage business. Other big names like Starbucks, Advanced Micro Devices, and Super Micro Computer also dragged on the market with disappointing profit reports.
Federal Reserve Chair Jerome Powell is expected to give some guidance on the chances for a rate cut later this year in a press conference following the rate announcement. Traders had initially been optimistic about multiple rate cuts in 2019, but recent reports showing higher than expected inflation have tempered those expectations. Companies will need to deliver better profits without the benefit of easing rates that can boost the economy and investment prices. Starbucks and Super Micro Computer saw significant drops in their shares despite meeting profit expectations.
Amazon and DuPont were among the winners in the market, with Amazon reporting stronger profit for the quarter and DuPont reporting stronger-than-expected profit. The bond market saw Treasury yields ease slightly following weaker reports on the economy, including a report indicating the U.S. manufacturing sector fell back into contraction. The hope on Wall Street is that a cooldown in job openings could help keep the job market in check, balancing wage pressures and inflation. The 10-year Treasury yield slipped to 4.64% while the two-year Treasury yield eased to 5.00%.
Many international stock exchanges were closed for holidays, with the Nikkei 225 in Tokyo slipping 0.3% and London’s FTSE 100 down 0.1%. Overall, Wall Street remains uncertain about the Fed’s interest rate decision and continues to monitor economic reports for indicators on the health of the economy. The mixed performance of big-name companies following their profit reports is adding to the cautious sentiment in the market, as investors weigh the impact of potential rate cuts on corporate earnings and stock prices.
