Dow Jones bounces back after Fed’s Powell hints at 5.25% rate soon; Amazon, Tesla advance on analyst ratings

The Dow Jones Industrial Average pared early losses and traded flat by midday Wednesday. Fed Chairman Jerome Powell confirmed that interest rates will continue to rise in his congressional testimony. Powell observed that “inflationary pressures continue to run high, and the process of getting inflation back to 2% has a long way to go.”


The Fed chairman said in remarks prepared for his speech before a meeting of the House Financial Services Committee that “almost all FOMC participants expect that it would be appropriate to raise interest rates somewhat further by the end of the year.”

The interest rate break last week was a “prudent” step, he said, to allow the committee to assess the impact of the tightening. The Fed chairman will address the Senate Banking Committee on Thursday.

Last week, the Fed halted tightening and left interest rates unchanged, while indicating that two more rate hikes may be needed to curb inflation. An increase after the meeting in July will bring the interest rate to 5.25%.

The S&P 500 fell 0.4% while the Nasdaq slipped, falling 1.3% by noon ET.

The small-cap Russell 2000 fell 0.5% and the Innovator IBD 50 ETF (FFTY) fell 1.3%.

Volume on the NYSE fell, but rose on the Nasdaq compared to the same time on Tuesday.

Crude oil prices rose over 1% to trade at $72.19 a barrel.

The interest rate on the benchmark index for 10-year government bonds rose 4 basis points to 3.77%.

Dow Jones shares in focus

apple ( AAPL ) continued to tread along a rising 10-day moving average, according to IBD MarketSmith. Shares retreated slightly in light volume on the hour. Walgreens (WBA) is trying to regain its 50-day line ahead of earnings next week.

Shares of Adobe (ADBE) rose at the opening bell, but reversed lower at midday. Earlier, BMO Capital Markets analyst Keith Bachman raised his price target to 570 with an upgraded outperform rating due to a boost from AI technologies.

Exact Sciences (EXAS) fell despite positive results from the study to evaluate the next-generation Cologuard treatment for colon cancer. The original Cologuard was approved in 2014.

Homebuilders and medical stocks on alert

Outside the Dow Jones, Merit homes (MTH) is in a buy zone after clearing a buy point at 130.68 on Tuesday. It was also Tuesday’s stock for the day. KB Home (KBH) is on deck to report earnings Wednesday while Olive Garden restaurants parent Darden (DRI) and Accenture (ACN) report Thursday. KBH and DRI rose as ACN tests its 10-day line.

On the IBD 50, growth stocks TransMedics (TMDX) is above its 50-day line in a cup base with a buy point at 90.15. Lantheus Holdings (LNTH) retook its 50-day line on Tuesday. Medical product stocks rose on Wednesday. Generac (GNRC), on the IBD Leaderboard, is in a cup base with an entry of 141.54.

Outside the Dow Jones: Tesla, Amazon

Elsewhere, Tesla ( TSLA ) fell after Barclays analyst Dan Levy downgraded the stock to hold from buy but raised his price target to 260 from 220.

Spotify ( SPOT ) also fell, although Wolfe Research analysts gave it a price target of 190 with an outperformance.

Amazon (AMZN) fell slightly after Jefferies raised its price target to 150 from 135. Shares are tracking above the 10-day mark.

Dow Jones stock Nike (NKE) had a price target cut to 135 from 140 by Telesey Advisory Group. Analysts maintained an outperform rating for the stock. The stock rose slightly at midday on Wednesday.

Oppenheimer analysts raised the price target for Uber ( UBER ) to 65 from 55. However, UBER stock pared early gains. It is on the IBD Leaderboard and the IBD 50.

Shares of FedEx (FDX) fell below the 50-day mark after the shipping company gave a disappointing earnings outlook for 2024. Weak demand is expected to offset a $4 billion cost-cutting effort. United Parcel service (UPS) fell in sympathy.

PayPal (PYPL) fell Wednesday afternoon after Tuesday’s significant gain when investment firm KKR agreed to buy $44 billion in loans on PayPal’s balance sheet. The stock cleared its 50-day line on Tuesday and will test it on Wednesday.

Please follow Ramakrishnan on Twitter for more news on the stock market today.


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