Dow Finishes Slightly Lower as Traders Consider a Faster Fed Tightening Cycle: Live Updates

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The Dow Jones Industrial Average finished slightly lower Wednesday as the market fought to overcome Tuesday's selloff, spurred by comments from Federal Reserve Chairman Jerome Powell hinting at higher interest rates for longer.

The Dow dipped 58.06 points, or 0.18%, to end at 32,798.40, while the S&P 500 edged 0.14% higher to settle at 3,992.01. The Nasdaq Composite rose 0.4% to finish at 11,576.00.

Fresh job market data fueled investor concern that bigger rate increases may be ahead. Data showed that job openings{

Job openings decline in January but labor market still tight

Job openings fell in January but remained elevated and still outnumber available workers by a nearly 2 to 1 margin, the Labor Department reported Thursday.

Available positions totaled 10.824 million for the month, a decline of about 410,000 but still above the FactSet estimate for 10.58 million.

The numbers indicate a historically tight labor market in which open jobs outnumber those considered unemployed by a 1.9 to 1 margin, according to January data from the Bureau of Labor Statistics.

— Jeff Cox

Private payrolls rise more than expected in February

Businesses added more jobs than expected in February, according to data released Wednesday by payrolls services firm ADP.

Private payrolls rose by 242,000 in February, topping a Dow Jones estimate of 205,000. That was also above the upwardly revised 119,000 jobs gain from January.

The report comes ahead of Friday's closely watched nonfarm payrolls for February, further supporting the perception that the economy is running hot and may require higher rate hikes to cool it.

— Jeff Cox, Samantha Subin

Stocks were coming off a down session after comments from Powell's Senate testimony cautioned lawmakers that the central bank's terminal rate will likely be higher than previously anticipated due to stubbornly high economic data. Commentary continued on Wednesday as Powell spoke before the House Financial Services Committee.

"It just raises the idea that they may have to do more," said Kathy Bostjancic, chief economist at Nationwide. "The fact that they're even willing to go rev it up, it introduces the idea even more so that they make a policy mistake — that this results in a hard landing for the economy."

While Powell emphasized during his testimonies that no decision has been made about the March meeting, traders are betting on a bigger-than-expected hike. More than 75% are calling for a 50 basis point increase, according to CME Group's FedWatch tool.

Lea la cobertura del mercado de hoy en español aquí.

Dow finishes lower, S&P and Nasdaq edge higher

The Dow dipped 58.06 points on Wednesday, or 0.18%, to end at 32,798.40, while the S&P 500 edged 0.14% higher to settle at 3,992.01. The Nasdaq Composite rose 0.4% to finish at 11,576.00.

— Samantha Subin

Eaton Vance's Dunn on finding opportunities in this market

The days of zero interest rates are over for now, and that means it's time for investors to rethink how they allocate their money, said Eaton Vance's Aaron Dunn.

"'We think we're in an entirely new decade of market behavior," he said, noting comparisons to the 1970s and 1940s, when inflation embedded itself in the economy.

Given this backdrop, Dunn recommends investing in quality cyclicals, and companies that are intrinsically undervalued.

Some of those areas include industrial and defense stocks. He also sees value in energy, viewing it as a constructive industry with several years of investment opportunities, and poised to benefit from an undersupplied globe and the need to reposition energy supply to Europe.

Some of his top sector picks include Halliburton and Conocophillips.

Dunn is also finding value in consumer discretionary stocks focused on helping consumers save money, such as Dollar Tree and BJ's Wholesale.

While Dunn expects the market to ultimately end the year higher, he expects a bumpy road ahead for equities and revisit of October's lows.

"I'm worried that there's a reckoning coming that we haven't faced yet," he said.

— Samantha Subin

Meta is 'well positioned' for upside and downside risks, Bank of America says

Another round of layoffs at Meta Platforms would be further proof that the company is being serious about efficiency and possibly a sign that the company can beat its expense guidance, according to Bank of America.

Analyst Justin Post said in a note to clients that the reported layoffs could give the company "some cushion" in its cost-cutting plans, while not hurting the company's potential growth on the advertising side.

"We see Meta as relatively better positioned in the advertising sector on the top line, while the company's focus on efficiencies provide more downside support to EPS in the case of recession. We have above Street 2024 EPS at $12 based on 27% GAAP [operating income], and given Meta's efficiency mentality, we see upside potential based on company's historical average of around 35-40% OI (especially if headcount is down 10%+ going into 2024)," the note said.

Bank of America has a buy rating and a $220 price target on Meta. The stock was trading down less than 1% at roughly $184 per share on Wednesday afternoon.

— Jesse Pound

Stocks lower as final trading hour kicks off

Stocks were lower as the final hour of trading began.

The Dow fell 162 points, or 0.5%. The S&P 500 traded 0.2% lower, while the Nasdaq Composite was flat.

— Samantha Subin

Argus upgrades Nordstrom to buy

Argus raised its rating on Nordstrom to buy from hold, saying that it expects stronger results in coming quarters for the department store company.

Nordstrom has been hurt by weaker economic conditions, unproductive inventory, and soft sales to lower-income customers," analyst Kristina Ruggeri wrote in a client note on Tuesday.

"However, it has also divested unprofitable businesses and reduced unwanted inventory through discounts and promotions. In addition, Nordstrom has strengthened its supply chain, which has lowered SG&A expense as a percentage of sales," Ruggeri continued.

Argus also noted that the company has continued to repurchase shares and pay down debt, in addition to benefiting from strong brand recognition.

Ruggeri set her price target to $23 per share, implying an upside of almost 18% Tuesday's closing price. The stock was down 1.1% midday Wednesday, amidst a 19.5% rally since the start of 2023.

— Hakyung Kim

Wall Street's getting ready for a recession, Oanda's Ed Moya says

"It appears that Wall Street is getting ready for a recession. How bad of a recession will depend on what happens with these next few inflation reports," wrote Ed Moya of Oanda, as stocks struggled for a second day following comments from Federal Reserve Chair Jerome Powell.

Powell said Tuesday that rates will likely have to go higher than anticipated to ease inflation.

"The Fed will remain data-dependent and right now you can make a strong argument that the Fed needs to take rates to 6.00%," Moya noted.

— Fred Imbert

Upside from here looks 'somewhat limited,' says BTIG's Krinsky

The upside for the market looks constrained going forward, according to BTIG's chief market strategist Jonathan Krinsky.

"We would be surprised if conditions continued to ease much from here, and would actually expect them to tighten," he wrote in a Wednesday note to clients. "Given the high correlation with equities, upside seems somewhat limited here."

He added that the firm views 4,020 as a solid initial resistance level for the S&P, unlikely to be easily broken.

"Once again the bounce in equities is coinciding with a pullback in the U.S. Dollar," he said. "Rallies have simply been unable to show any sustainability without a weakening DXY."

— Samantha Subin

Healthcare stocks weigh on Dow

Declines in healthcare stocks contributed to the Dow's more than 200-point loss during midday trading.

Merck shares were last down about 3% after the pharmaceutical stock announced its licensing deal with OPKO Health. UnitedHealth shares dropped about 1.4%, while Johnson & Johnson, Amgen and Procter & Gamble moved slightly lower.

— Samantha Subin

Stock making the biggest moves midday

Check out the companies making headlines in midday trading.

  • Diversey Holdings — The maker of cleaning and hygiene brands like Dove, Lysol and Air Wick surged more than 37% after the company agreed to be acquired by Solenis in cash in a deal valued at $4.6 billion.
  • United Natural Foods — The organic food company tumbled 26% after posting earnings for its fiscal second quarter that missed analyst expectations, according to FactSet.
  • Stitch Fix — The styling company saw shares drop 11% after it reported weaker than expected revenue for the latest quarter as well as a wider-than-expected loss, by 24 cents per share.

For more big movers check out our full list here.

— Tanaya Macheel

Merck shares fall on Opko Health deal

Merck shares were down about 3% during midday trading after the pharmaceutical company announced a licensing deal with OPKO Health to help develop its experimental vaccine targeting Epstein-Barr virus.

As part of the deal, Merck will take control of clinical and regulatory activities, in a deal worth more than $900 million. OPKO will receive an upfront payment totaling $50 million and could earn an additional $872.5 million, plus royalties, overtime.

OPKO shares last rose nearly 7%.

— Samantha Subin

Declining office values will hit other real estate sectors, Keefe, Bruyette & Woods says

Keefe, Bruyette & Woods said the trouble in the commercial real estate sector is worse than many realize, and it could deal a blow to other slices of the industry including multifamily housing.

One factor is that rates are now expected to be higher for longer, and an estimated 40% of the industry's debt involves floating rates. This will add another layer of stress to the system.

The firm is predicting rising loan losses ahead as commercial real estate volumes fall 30% to 40% and values shrink 10% to 20%. Baked into that prediction is an estimated 30%-plus decline in office values. Right now, the consensus estimates call for 5% to 15% declines in office values, so that's significantly worse than expected.

Analyst Jade Rahmani said the troubles in tech-heavy markets where remote work is common like San Francisco and New York are well known. However, he predicts weakness in Washington, D.C., Seattle, Austin, Phoenix and other markets could take some by surprise.

— Christina Cheddar Berk

Shares of Weight Watchers parent give up gains as analyst cuts stock to sell

Craig-Hallum analyst Alex Fuhrman downgraded WW International shares to sell from hold after the stock's huge jump on Tuesday, saying the gains were an "overreaction" to the company's telehealth acquisition.

"WW's core business is declining double-digits for the third year in a row and profitability has eroded to the point that we no longer expect the company to generate positive free cash flow this year," Fuhrman wrote.

The analyst added that he supports the deal, which he said will help protect the company's market share as Big Pharma enters the weight loss market.

As CNBC Pro reported Tuesday, the deal acknowledges the threat that Weight Watchers is under as more consumers look to use medication to treat obesity and overweight. Still, the acquisition won't solve all of WW's problems.

Shares tumbled more than 22% on Wednesday, giving up the lion's share of Tuesday's gain.

— Christina Cheddar Berk

Goldman Sachs says buy Axon Enterprise

Goldman Sachs' Michael Ng initiated coverage of Axon Enterprise with a buy rating, saying the taser maker's longstanding ties to state and local police will drive demand for the company's stun gun and other less-lethal products. The analyst said this comes amid greater calls for accountability in public safety.

"AXON's market leadership with TASER has resulted in deep customer relationships with state and local law enforcement (e.g., 17k of 18k US law enforcement agencies) and a highly valuable installed base of law enforcement personnel," Ng wrote to clients on Tuesday.

CNBC Pro subscribers can read the full story here.

— Sarah Min

Powell says no decision yet on March Fed meeting

Federal Reserve Chairman Jerome Powell said Wednesday that he hasn't made up his mind about what the central bank will do regarding interest rates when it meets later in March.

Speaking to the House Financial Services Committee, Powell said he and his colleagues will be assessing a raft of incoming inflation data, including reports next week on consumer and producer prices.

"They're going to be important in our assessment of the higher readings that we very recently have received and the overall direction of the economy and of our progress in bringing inflation down," the Fed leader said.

"We have not made any decision about the March meeting," he added. "We're not going to do that until we see additional data. The larger point, though, is we are not on a preset path and we will be guided by the incoming data and the evolving outlook."

Powell shook markets Wednesday when he said he anticipates that if the inflation data remain hot, he expects rates will go higher than expected and at a faster pace. Markets now expect the Fed to raise its benchmark borrowing rate by 0.5 percentage point when the Federal Open Market Committee meets March 21-22.

— Jeff Cox

CVS Health, 3M among stocks trading near multi-year lows

These are some of the stocks hitting new lows during Wednesday's trading session.

  • Lumen Technologies trading at all-time lows back to the CenturyTel/Embarq merger that created CenturyLink in 2008
  • Match Group trading at all-time lows back to its IPO in November 2015
  • Advance Auto Parts trading at lows not seen since July 2020
  • Hasbro trading at lows not seen since March 2020
  • Hormel trading at lows not seen since March 2020
  • Signature Bank trading at lows not seen since November 2020
  • Centene trading at lows not seen since October 2021
  • CVS Health trading at lows not seen since August 2021
  • 3M trading at lows not seen since May 2013
  • Gen Digital trading at lows not seen since December 2020
  • Boston Properties trading at lows not seen since February 2010

 Arista Networks, meanwhile, was last trading near highs not seen since December 2021.

— Chris Hayes, Samantha Subin

U.S. equities appear less attractive than bonds, Bernstein says

The drastic shift in interest rates and bond yields has created an environment where U.S. equities look increasingly less attractive than bonds, according to Bernstein.

"The equity risk premium (ERP) has fallen in recent years in both Europe and the US - equities are less attractive relative to bonds than they were at the end of 2019 in both regions driven by the fact that bond yields have risen by more than equities have de-rated," wrote strategist Sarah McCarthy in a Wednesday note to clients.

To be sure, Bernstein still views European equities as more enticing and attractive over the long-run. That's because the average implied ERP stands close to 5%, versus the long historical average of 4%.

"In contrast, the average US ERP is currently 2%, below the long-run average of 2.6%," she wrote. "US equities are no longer attractive relative to bonds."

— Samantha Subin

Job openings decline in January but labor market still tight

Job openings fell in January but remained elevated and still outnumber available workers by a nearly 2 to 1 margin, the Labor Department reported Thursday.

Available positions totaled 10.824 million for the month, a decline of about 410,000 but still above the FactSet estimate for 10.58 million.

The numbers indicate a historically tight labor market in which open jobs outnumber those considered unemployed by a 1.9 to 1 margin, according to January data from the Bureau of Labor Statistics.

— Jeff Cox

Stocks open little changed

Stocks open little changed on Wednesday.

The Dow Jones Industrial Average and S&P 500 traded flat, while the Nasdaq Composite added about 0.1%.

— Samantha Subin

Bank of America calls On Semiconductor a top auto pick

Bank of America analyst Vivek Arya named On Semiconductor a top auto pick that could jump more than 25%.

Arya reiterated a buy rating on the stock following what he called a "confident" management presentation this week. This was in addition to news that On Semiconductor signed a long-term electric vehicle supply deal with BMW.

"This win complements ON's other notable wins at Tesla, Mercedes, Jaguar Land Rover, VW, Hyundai, and Nio," Arya wrote in a Tuesday note. "Despite macro headwinds impacting consumer and some computing and industrial markets, auto semis remains a bright spot, affirmed by ON and several peers TXN, MCHP and WOLF."

— Sarah Min

Trade deficit rose less than expected in January

The U.S. trade deficit in goods and services nudged higher in January amid a rise in imports of autos and cell phones, the Commerce Department reported Wednesday.

The deficit totaled $68.3 billion, up $1.1 billion from December but slightly lower than the $68.7 billion Dow Jones estimate.

Contributing to the shortfall were a $3.1 billion increase in vehicles, parts and engines imports, as well as a $1.6 billion rise in cell phone and other household goods. Those were offset partially by increases of $4.1 billion in consumer good exports and $1.9 billion in capital goods exports.

Though the trade deficit increased, it is well off its record $106.4 billion in March 2022.

— Jeff Cox

Private payrolls rise more than expected in February

Businesses added more jobs than expected in February, according to data released Wednesday by payrolls services firm ADP.

Private payrolls rose by 242,000 in February, topping a Dow Jones estimate of 205,000. That was also above the upwardly revised 119,000 jobs gain from January.

The report comes ahead of Friday's closely watched nonfarm payrolls for February, further supporting the perception that the economy is running hot and may require higher rate hikes to cool it.

— Jeff Cox, Samantha Subin

CrowdStrike, Occidental highlight early movers

Here are some notable premarket movers on Wall Street.

CrowdStrike — Shares of the cybersecurity firm climbed more than 6% in premarket trading after a stronger-than-expected report for the fourth quarter. CrowdStrike generated 47 cents in earnings per share on $637 million of revenue. Analysts surveyed by Refinitiv had penciled in 43 cents on $625 million in revenue. Free cash flow rose above $200 million for the quarter.

Occidental Petroleum — The energy stock climbed nearly 3% in premarket trading after a new regulatory filing showed Warren Buffett's Berkshire Hathaway added to its already large stake in the company over the past trading sessions. The Omaha-based conglomerate bought nearly 5.8 million shares of the oil company in a few separate trades on Friday, Monday and Tuesday, marking the first time the "Oracle of Omaha" hiked his bet since September.

Stitch Fix — Shares of the apparel company slid more than 10% after Stitch Fix reported a wider-than-expected loss for its second quarter. The company lost 58 cents per share, while analysts surveyed by Refinitiv had been expecting a loss of 34 cents per share. Stitch Fix did report its first quarter of positive free cash flow in more than a year.

Check out more movers here.

— Jesse Pound

Mortgage demand rises slightly

Mortgage demand recovered slightly last week, with application volume rising 7.4% after stooping to a 28-year low the previous week.

The rise in volume came even as interest rates ticked upward, with the average rate on a 30-year fixed mortgage inching up to to 6.79% from 6.71%.

Applications to refinance a home loan also rose 9% week over week, but were 76% lower than the same week last year.

— Diana Olick, Samantha Subin

Berkshire Hathaway buys more Occidental Petroleum

A regulatory filing revelated Tuesday evening that Warren Buffett's Berkshire Hathaway added to its already giant stake in Occidental Petroleum.

Berkshire bought nearly 5.8 million shares of the oil company in separate trades Friday, Monday and Tuesday. The company paid in a range of $59.80 per share to $61.90 per share.

This also marks the first time since September that Berkshire has added to its Occidental stake, bringing it to more than $12 billion, based on Tuesday's close.

— Fred Imbert, Yun Li

Berenberg downgrades Tesla

Berenberg analyst Adrian Yanoshik said investors should hold off on buying more Tesla shares for now, downgrading the stock to hold from buy.

"Tactical price changes reflect cost-leadership strategy: Tesla's new plants offer multi-year opportunity in capital and labour efficiency," Yanoshik wrote to clients on Tuesday. "However, we downgrade our rating to Hold now that our Buy thesis – based on misplaced fears of a price war – appears to have been accepted by the market."

Tesla shares fell slightly in the premarket.

— Sarah Min

There's still a path to a soft landing, Morgan Stanley's global chief economist says

There's still a path to a soft landing in spite of Federal Reserve Chair Jerome Powell's comments suggesting rates could go higher for longer, according to Morgan Stanley's global chief economist Seth Carpenter.

Of course, there will need to be a cooling in the labor market for the Fed to meet its own inflation projections, he said in a Tuesday appearance on CNBC's "Closing Bell: Overtime."

Carpenter expects that nonfarm payrolls will need to ease below 100,000 per month to accomplish that goal. Investors are anticipating the February jobs report this week to see whether the economy is continuing to heat up, or if January's blockbuster report was an aberration.

"If we're staying at 500,000 nonfarm payrolls per month, that's clearly not doing it. We need to see it slow, get down to, say, below 100,000 per month," Carpenter said. "But if it stays positive, then I think that kind of trajectory, that's the path for a soft landing. We still think it's possible."

— Sarah Min

Gundlach says the Fed is ‘very likely’ to hike rates by half point this month

DoubleLine Capital CEO Jeffrey Gundlach said it's "very likely" that the Federal Reserve will raise interest rates by half a percentage point at its next policy meeting.

"We've had a very large increase in short-term interest rates and a further inversion of the yield curve," Gundlach said Tuesday during a DoubleLine investor webcast. "We don't need the Fed. All we need is the 2-year Treasury."

The yield on the 2-year U.S. Treasury note jumped over 12 basis points to top 5% on Tuesday, reaching its highest level since 2007. The sharp move higher followed Fed Chairman Jerome Powell, who said interest rates are "likely to be higher" than previously anticipated.

The so-called bond king said the Fed funds rate has almost perfectly mirrored the 2-year Treasury yield over the years.

"It's now corroborating the idea that the Fed will probably take the Fed funds rate up to 5% at the upcoming meeting," Gundlach said.

— Yun Li

Small- and midcap stocks outperformed Tuesday's stock market slide

In investments, sometimes you have to be satisfied suffering less than the rest.

The Dow Jones Industrial Average slid 1.72% Tuesday, giving back all of the remaining rally it had scored in 2023 and the S&P 500 tumbled 1.53%, both in the wake of Fed chairman Powell telling Congress that benchmark interest rates may have to move higher than thought in order to successfully get control of inflation.

Using those declines as yardsticks, what parts of the stock market outperformed on a relative basis, holding up better than the largest stocks?

Well, the Nasdaq Composite, which after all contains more than 2,500 stocks, dropped a smaller 1.25% Tuesday. The S&P Midcap 400 Index fell 1.18% while the S&P Smallcap 600 Index lost just 1.0%. The Russell 2000, another barometer of smallcaps, declined 1.25%.

Helped by stronger airlines, the 20-stock Dow Transports gave up 1.25%. The NYSE Consumer Staples Index weakened by 0.99% and the NYSE Tech/Media/Telecom Index retreated 1.07%.

Bad, but not quite as bad.

— Scott Schnipper

Short-term Treasury yields pop, with rates exceeding 5%

Bond yields surged on Tuesday, and a range of short-term Treasurys saw their rates exceed 5%.

The rates on 3-month, 6-month, 1-year and 2-year Treasury notes leapt over 5% on Tuesday. At their highs, rates on the 3-month T-bill and 2-year Treasury surged to levels last seen in 2007, while the yield on the 1-year note touched its highest level since 2006.

Further, the spread in yields between the 2-year and 10-year Treasurys reached a fresh low of -105.3, the lowest level since 1981.

Speaking before the Senate Committee on Banking, Housing, and Urban Affairs earlier in the day, Federal Reserve Jerome Powell said that interest rates are "likely to be higher" than the central bank had anticipated. The comments raised fears that policymakers could boost interest rates by a half point at their next meeting later this month. Bond yields leapt, and stocks sold off on the news.

-Darla Mercado, Gina Francolla

U.S. stock futures open flat on Tuesday

U.S. stock futures were flat on Tuesday night.

Dow Jones Industrial Average futures ticked higher by 17 points, or 0.05%. S&P 500 and Nasdaq 100 futures added 0.03% and 0.07%, respectively.  

— Hakyung Kim

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