Inflation is a hot topic after Fed Chair Jerome Powell Cools Stock Market

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After three days of record high, the investor's enthusiasm increased slightly on Wednesday. Blame the Federal Reserve. As the proceeds continued in time, the Fed interrupted, with a new statement following its two-day meeting and a press conference hosted by Fed Mayor Jerome Powell. The statement and the press conference told a bit of a different story – and that the divergence is evident in today's stock chart.

Shares affected heights of the day shortly after the Fed statement was released at 2 am In the text called Fed inflation, or the lack thereof. The main line was: "In 12 months, total inflation and inflation for goods other than food and energy have fallen and went below 2 per cent."

The decline language was new and seemed to stimulate hope that a rate cut might actually be at hand. Chairman Powell quickly spread the dreams, though. During his subsequent press conference, Powell said:

We suspect some temporary factors may be at work. Thus, our baseline view remains that with a strong labor market and continued growth, inflation will return to 2 per cent over time and then be approximately symmetrical about our long-term goal.

Stocks fell nearby, with S & P 500 ending the day down 0.75%.

Here's an excerpt from what economist Joel Naroff from Naroff Economic Advisors sent on Wednesday afternoon:

The markets were whipsawed by Fed's poor communication of their views on inflation. First, they responded as if prices were falling, and they supported everything out and even a little more.

Investors have already adjusted the odds for a price reduction that takes place at the Fed's next meeting in June. Last week, investors were priced at a 25% chance of quarterly point reduction. Tonight, the probability is 7%, and stock investors are back in a sales stamp.

The Market at a Glance

Dow Jones Industrial Average
: -0.61% to 26.430.14

S & P 500
: -0.75% to 2.923.73

Nasdaq
: -0.57% to 8.049.64

The Hot Stock :
Royal Caribbean Cruises

+ 6.7%

The greatest loser :
Molson Coors Brewing

-7.5%

Best Sector : Property + 0.0%

Worst sector : Energy -2.0%

Our Tesla obsession

The last the controversy around
Tesla

CEO Elon Musk – his back and forth with the SEC over his Twitter habit – seems to be over. For now. On Tuesday, a US District Judge approved new settlement terms that effectively give Musk a list of things he cannot discuss.

But if someone was expecting Musk to really withdraw from Twitter that didn't happen. Since the SEC's Twitter rules were first published in a court archive last Friday, Musk tweeted 47 times . On Monday night, he replied "excellent analysis" to a blogger who wrote a post called "Teslas Autonomy Day, Stock, Short Sellers and More." The post contains this line of short selling:

Tesla's stock is currently one of the most short-term shares in the stock market. More than 32 million shares in the Tesla share (approximately $ 8 billion worth) are sold, for which the seller does not own the stock. If you think this seems like a kind of crazy loophole arrangement, one day we'll look back and wonder how this was legal, you wanted it right. Short sellers have every incentive to spread Fear, Uncertainty and Doubt (known as FUD) a stock in the hope that the shares go down, ideally to $ 0 where they can buy their short-term shares for a fraction of what they sold. 19659010] The muscle doesn't change anytime soon.

This week, for the last episode of our Readback podcast, I spoke to my colleague David Marino-Nachison about the infinite occupation with Musk and Tesla. Consumers and readers remain fixed on Tesla, and journalists are not shy of providing a common solution. We estimate that David spends about a third of his time covering Tesla these days.

On the podcast, David nicely summarizes the three things that capture the Tesla occupation: 1) Musk himself at the helm; 2) a company that took the news of electric cars and made them a status symbol that impresses car critics, consumers and technical experts alike; and 3) the perpetual possibility that Tesla still cannot survive.

David and I talked about all three topics. Check out the episode here.

What we read

Apple Store is up for revenue. Here's what Wall Street thinks. Barron's

Opposition Can Grow to Occidental's Anadarko Deal Due to Tough Berkshire Terms Barron's

AMD Chief Lisa Su on New Chips, Cloud Gaming, and M & A Barrons

Royal Caribbean CEO Richard Fain on Revenue, Consumer Confidence and Company Future Barron's

For Lower Paid Workers, Robot Leaders have come Wall Street Journal

Earnings

Thursday's income calendar includes reports from Activision Blizzard, CBS,
Cigna

Dow,
DowDuPont

Expedia

Gilead Sciences,
Kellogg

and
Monster Drink
.

A version of this article was first displayed in Review & Preview, a daily email from Barron. Sign up here and every night we will look at the news that moved markets throughout the day and look forward to what it means for your portfolio in the morning.

Write to Alex Eule at alex.eule@barrons.com