Major stock market indices initially rose after the Fed announced its next move on interest rates, but indices have been volatile ever since. The market soured after chairman Jerome Powell said rate cuts are not expected.
The Federal Reserve raised the Fed Funds rate by the expected 25 basis points. The increase brings the rate to 4.75% to 5.0%.
The FOMC stated that the banking system is “sound and resilient” but warned that banking problems are “likely to lead to tighter credit conditions.” Indexes slid after Powell, when asked if interest rate cuts were to be expected, replied, “That’s not our baseline expectation.”
The Federal Reserve has a delicate dance to perform as it tries to contain inflation by raising interest rates while sensitive to the banking crisis. In its new forecast, the Fed only indicated one rate hike.
The 10-year US Treasury yield fell 11 basis points to 3.50%.
At 3:22 p.m. ET, the Dow Jones Industrial Average was down 0.1%. The S&P 500 rose 0.2%. The Nasdaq composite reversed course and climbed 0.5%. The Russell 2000 fell 1.4%.
NYSE volume down and Nasdaq volume up from the same time on Tuesday.
The S&P 500 approached its 50-day moving average before pulling back. The Nasdaq remained above its 50-day and 200-day moving averages. The Nasdaq 100-tracking Invesco QQQ Trust ETF (QQQ) rose 0.2%.
The Innovator IBD 50 ETF (FFTY) outperformed the major indices, rising 0.3%.
Crude oil added 1.2% to $70.42 a barrel. Bitcoin retreated 1.9% to USD 27,745.
European equities rose, with the German DAX up 0.1% and the Paris CAC up 0.3%. The London FTSE added 0.4% to close out the trading day.
Stock market today: donut stocks are rising
Ollie’s bargain outlet (OLLI) rose more than 10% after reporting better-than-expected fourth-quarter earnings per share and revenue. Earnings per share and sales guidance for the full year were also the top positions. Shares of the membership warehouse retailer were above its 200-day moving average.
Aehr test systems (AEHR) gained back 1.5% after tapping the buy point of 37.67 from a choppy base. The relative strength line reached a 52-week high on the weekly chart, a positive sign.
Nike (NKE) fell 3.4% despite a better result and an increase in full year sales forecast. But the company said it expects margins to fall by about 250 basis points for fiscal year 2023. Nike is in a cup base with a buy point of 131.41, and back below the 50-day line after briefly puncturing it on Tuesday.
Winnebago (WHO) posted gains for most of the morning and then crept up 0.7% after reporting better-than-expected fiscal Q2 EPS and sales. But management said demand for recreational vehicles is falling. Stocks retook the 200-day moving average on Tuesday.
Krispy Kreme (DNUT) rose 6.6% in heavy volume after Truist Securities upgraded the donut shop’s stock to buy from hold, raising its price target from 15 to 20. DNUT has expanded from a 5% buy zone that has expanded to 14, 46 went from a cup-with-handle base.
IBD 50 stock Holding on (ONON) added 2.2% in heavy volume, topping yesterday’s gap of 26.4% after a positive earnings report. The Swiss athletics and footwear manufacturer is being extended from a cup-with-handle 24.21 sale point.
Double Verify (DV) rose 5.1% after KeyBanc upgraded the digital media platform’s stock from sector weight to overweight and raised its price target to 30.
Stock action: Meme stocks come to life
GameStop (GME) rose more than 40% after surprising investors with better-than-expected Q4 results. The gaming and video electronics seller hit the 200-day mark before meeting resistance at that level.
AMC Entertainment (AMC) gained 3% sympathy for fellow meme stock GameStop. caravan (CVNA) increased by more than 12%. The car seller announced guidelines and plans to restructure debts in advance.
Follow Kimberley Koenig for more stock market news on Twitter @IBD_KKönig.
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