U.S. stocks traded lower Wednesday as the minutes from the Federal Reserve's May meeting raised concerns of persistent inflation, indicating the central bank may not cut interest rates soon.
The Dow Jones Industrial Average declined 201.95 points, or 0.51%, closing at 39,671.04. It was the 30-stock index's worst session in May. The S&P 500 lost 0.27% to end at 5,307.01, and the Nasdaq Composite dropped 0.18% to close at 16,801.54.
Minutes from the April 30 to May 1 policy meeting of the Federal Open Market Committee released Wednesday stated a lack of progress in recent months toward lower inflation. The minutes also showed "various participants" discussed a willingness to hike rates if inflation did not keep moving lower toward its 2% goal.
Investors also looked ahead to the widely anticipated release of Nvidia's latest earnings report. The chipmaker dropped 0.5% Wednesday ahead of its quarterly earnings results after the bell. Analysts are expecting another strong quarter from the chipmaker. LSEG data shows consensus estimates call for earnings per share and revenue to have risen 400% and 240% year on year, respectively.
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The chipmaker's earnings announcement "has become one of the most important events on the macro calendar," according to Deutsche Bank strategist Henry Allen.
Allen noted that the day after Nvidia's last earnings report in February, the S&P 500 jumped more than 2%, notching its best daily results in more than a year.
Investors will closely watch the report for clues on whether this year's tech rally can continue. The tech-heavy Nasdaq Composite has jumped nearly 12% to record highs year to date.
Money Report
Target shares fell 8% on weaker-than-expected earnings, with management citing weaker spending trends in discretionary categories. The retailer's troubles raised broader concerns about consumer spending.
Stocks close lower Wednesday
U.S. stocks ended Wednesday's session in the red.
The Dow Jones Industrial Average fell around 202 points, or 0.5%.
The S&P 500 and Nasdaq Composite declined 0.3% and 0.2%, respectively.
— Hakyung Kim
Fed minutes affirm higher for longer
The hawkish tone of the minutes from the Federal Reserve's latest meeting indicates "higher for longer is the official mantra," said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.
"Given that rate cuts are off the table, bears would normally get excited, but because Chair Powell officially took rate hikes off the table, the market is going to fluctuate based on other factors," Zaccarelli said.
He added that Nvidia's earnings after the bell will dictate which direction the market moves in the coming days.
— Hakyung Kim
Health-care sector bucks Wednesday's sell-off
Health care was the only positive sector in the S&P 500 during afternoon trading Wednesday, adding about 0.15%.
Moderna led those gains, popping 11%, while Pfizer added 2%. Abbott Laboratories, Stryker and Johnson & Johnson gained at least 1% each.
— Samantha Subin
Clean energy stocks surge, First Solar hits 52-week high as enthusiasm grows over AI
Clean energy stocks are rallying as enthusiasm grows over potential demand for renewables as tech companies build out data centers at the same time they are trying to reduce carbon emissions.
The Invesco Solar ETF gained nearly 10%, while the benchmark iShares Global Clean Energy ETF was up about 4% in afternoon trading.
"It's a combination of a rotation out of traditional energy and back to renewables with power demand increasing due to data center growth and AI," James West, analyst at Evercore ISI, told CNBC.
First Solar surged nearly 19% to a 52-week high of $251.59. Analysts have become increasingly bullish that the solar module manufacturer will play a central role in supplying data centers with renewable energy. West said First Solar is also benefiting from the U.S. moving to impose tariffs on China.
The whole suite of solar stocks rallied. SunPower led the residential sector with a 19.8% jump. Nextracker and Array, companies that build devices for solar panels to track the sun, gained 13.6% and 16.5%, respectively.
— Spencer Kimball
Fed still worried about inflation, minutes show
The minutes from the Federal Reserve's most recent meeting showed the central bank remains concerned about U.S. inflation.
"Participants observed that while inflation had eased over the past year, in recent months there had been a lack of further progress toward the Committee's 2 percent objective," the summary stated. "The recent monthly data had showed significant increases in components of both goods and services price inflation."
"Various participants mentioned a willingness to tighten policy further should risks to inflation materialize in a way that such an action became appropriate," the minutes added.
— Fred Imbert
Stocks making the biggest moves midday
Check out some of the companies making headlines in midday trading:
- Target — Shares of the retailer pulled back more than 7% after a first-quarter earnings miss, underscored by a 3% year-over-year decline in sales.
- Analog Devices — Stock in the semiconductor manufacturer surged more than 8% after second-quarter results beat analysts' estimates. Massachusetts-based Analog reported adjusted earnings per share of $1.40 on revenue of $2.16 billion, compared to a consensus estimate from analysts polled by FactSet that forecast $1.26 in earnings per share and $2.11 billion in revenue.
- Shopify — Shares climbed more than 3% on the heels of an upgrade to buy from Goldman Sachs, with the investment bank noting Shopify's current share price gives investors an attractive entry point.
Read the full list here.
— Brian Evans
Semiconductor ETFs inch higher ahead of Nvidia earnings
Semiconductor exchange-traded funds ticked up Wednesday ahead of chipmaking giant Nvidia's quarterly earnings announcement after the bell.
The VanEck Semiconductor ETF (SMH) added 0.9%. Meanwhile, the iShares Semiconductor ETF and Invesco PHLX Semiconductor ETF added 1.3% and 1.1.%, respectively .
— Hakyung Kim
Energy lags broader market Wednesday
The energy sector dropped 1.8% Wednesday, making it the only sector in the S&P 500 to fall more than 1% on the day.
SLB and Targa Resources both declined 3% and led the sector's losses.
Crude oil futures fell for a third straight session ahead of a critical OPEC meeting in June.
— Hakyung Kim
Nvidia earnings: The most important report of earnings season
Nvidia's highly anticipated earnings report hits this afternoon. There is no disputing how important the chipmaker's numbers are to the broader earnings picture. S&P 500 earnings are on pace to rise 7.6% this season. Nvidia alone is responsible for one-third of the entire index's earnings growth, according to Tajinder Dhillon, senior research analyst at financial data firm LSEG.
While Apple and Microsoft have the largest earnings weightings on the S&P 500, no company will have more of an actual effect on overall S&P 500 earnings than Nvidia due to both its huge market cap and its outlandish earnings growth. Nvidia is the fourth-biggest stock in the S&P 500, but its earnings and revenue growth this quarter is unmatched by any of the other megacaps.
Analysts are expecting first-quarter earnings per share of $5.59. That is more than five times the $1.09 that the chipmaker reported a year ago. On the revenue front, Wall Street is projecting revenue of $24.65 billion, triple the $7.19 billion in the year-ago quarter.
But keep in mind, Nvidia's results have also significantly surprised to the upside in each of the reports from the past year. The chipmaker has posted double-digit surprises on the earnings front in each of the past four quarters and has done so on the revenue front, too, in three of the past four reports.
— Robert Hum
38 stocks in the S&P 500 hit new 52-week highs Wednesday morning
During Wednesday's morning trading session, 38 stocks in the S&P 500 hit new 52-week highs.
These included:
On the other hand, the S&P 500 stocks that hit new 52-week lows included Brown-Forman, Lululemon, Walgreens Boots Alliance and Bristol-Myers.
— Lisa Kailai Han, Christopher Hayes
Options market implies Nvidia earnings will be 'unusually important,' Goldman says
The options market is expecting a big move from Nvidia after its earnings, according to John Marshall of the Goldman Sachs derivatives research team.
"NVDA options suggest investors expect this earnings report to be unusually important; NVDA options imply a +/-11.9% earnings-day move vs. its 4-quarter historical earnings-day move of +/-10.8%," Marshall said in a note to clients.
But there may still be a trade opportunity given Nvidia's effect on the broader market, Marshall said.
— Jesse Pound
Garmin heads for worst day since 2022
Garmin shares on Wednesday were tracking for their worst daily move since September 2022 after Bank of America warned the electronics maker was "priced to perfection."
The stock tumbled more than 4% in morning trading. If that holds through session close, it will mark the biggest one-day loss for shares since Sept. 13, 2022, when the stock tumbled about 4.5%.
Despite Wednesday's slide, the stock is still up more than 28% on the year.
Bank of America analyst Ronald Epstein downgraded the stock to underperform from neutral and chopped $15 off his price target to $150. That target suggests shares can slip around 12% from Tuesday's close.
"In 1Q, Garmin has stood apart from peers demonstrating the strength of their brand, resiliency of their customers, and ignited growth across segment," Epstein said. "Now, however, we worry the momentum is decelerating … which implies the current valuation is unsustainable."
CNBC Pro subscribers can click here to read more about the call and the other big ones out of Wall Street this morning.
— Alex Harring
Strong Nvidia report could be a 'key tailwind' for overall market, Wolfe Research says
Another strong print from Nvidia after the bell could mean more upside for the broader market, according to Wolfe Research.
"While top-and-bottom-line surprises could be lower than they've been in recent quarters, we're most focused on F2Q25 revenue guidance," wrote Chris Senyek. "As long as it tops analyst expectations, NVIDIA is likely to remain a key tailwind for the overall U.S. stock market."
This print also marks the anniversary of the artificial intelligence darling's first blowout report that powered the surge in the "Magnificent 7" stocks. The last two reports also helped fuel "positive momentum when the rally was starting to fade," he added.
"In our view, much of the upside over the past month, including the SPX & NDX hitting new all-highs, can also be largely attributed to another surge in AI optimism," he wrote.
— Samantha Subin
Retailers express near-term caution, but remain hopeful for the second half
Coinciding with its first earnings miss in six quarters, Target gave conservative second-quarter guidance. The big-box retailer projects same-store sales of up 0% to 2% versus the Street's expectation for 1.5% growth. Meanwhile, earnings guidance of $1.95 to $2.35 has a midpoint of $2.15, which is below the $2.19 expected by analysts.
However, the full-year forecast is reaffirmed, implying better performance in the back half of the year. While they feel the U.S. consumer remains largely "resilient" overall, Target executives told analysts on the call that "currently, 1 in 3 Americans has maxed out or is nearing the limit on at least one of their credit cards. For these reasons and more, we remain cautious in our near-term growth outlook. Notably, we expect discretionary trends will continue to remain pressured in the short-term but to normalize over time."
TJX gave weak second-quarter guidance, with earnings per share at 88 cents to 90 cents, below the 94 cent estimate. Same-store sales are projected to grow 2% to 3%, a bit conservative compared to Wall Street's expectation of up 3%. The company raised its full-year earnings guidance, but that is mostly because of the off-price retailer's first-quarter beat. But considering the weak second quarter as well, the full-year outlook implies there is greater hope for the second half.
Last night, Urban Outfitters executives told analysts to expect more markdowns this quarter — particularly at its more troubled namesake stores — to clear out inventory before the back-to-school season. Despite that, they remained optimistic there will be "improved regular price sales and product margins in the back half of the current year."
— Robert Hum
Existing home sales unexpectedly fall
Existing U.S. home sales for April fell 0.9% to 4.14 million, a sign the housing market may be cooling. Economists polled by Dow Jones expected an increase of 1.4% to 4.25 million from 4.19 million in March.
— Fred Imbert
Nvidia shares inch lower
Nvidia shares ticked down 1.1% Wednesday morning, ahead of the company's earnings report after the bell.
Week to date, the chipmaker stock is up 2.2%. Shares have rallied 90.9% in 2024.
— Hakyung Kim
Stocks open flat Wednesday
U.S. stocks began Wednesday's trading session little changed.
The Dow Jones Industrial Average slipped 59 points, or 0.1%. The S&P 500 inched lower 0.1%, while the Nasdaq Composite ticked up 0.1%.
— Hakyung Kim
Target, Shopify among stocks making the biggest premarket moves
Check out the companies making headlines before the bell:
- Target — Target's shares tumbled more than 7% after first-quarter earnings missed estimates, driven by a year-over-year sales decline of about 3% as consumers bought fewer discretionary items.
- Analog Devices — The semiconductor manufacturing company jumped 6.2% after exceeding quarterly estimates. Analog Devices posted adjusted earnings of $1.40 per share in its fiscal second quarter on revenue of $2.16 billion, while analysts polled by FactSet forecast earnings of $1.26 per share, excluding one-time items, on revenue of $2.11 billion.
- Shopify — The retail software stock rose 2.6% following a Goldman Sachs upgrade to buy from neutral. The investment bank said the industry leader's shares are at an attractive entry point following a rough year to date.
For the full list, read here.
— Pia Singh
Wheat futures pop to highest level since July
Wheat futures hit their highest level since July 2023, part of a broad rise this year in multiple agricultural commodities.
Chicago wheat futures hit a high of 716.75 cents, as concerns mounted over harvests in Russia and Vietnam. Prices eased a bit after peaking and were last up 0.8% to 703 cents. On a weekly basis, wheat is up about 9%.
Agricultural commodity prices in general have been trending higher, with the Invesco DB Agriculture ETF up 1.3% over the past five trading days and nearly 16% year to date.
— Jeff Cox
Nvidia earnings could signal continued rally for tech, UBS global wealth management says
Nvidia's earnings report represents a key test that could help the tech and artificial intelligence rally take another leg higher, Solita Marcelli, UBS Global Wealth Management chief investment officer for the Americas, said in a note to clients. The rest of the sector has already held up its end of the bargain during earnings season.
"US tech earnings so far have been among the strongest in the first-quarter reporting season, with revisions in the sector outpacing the rest of the market. However, earnings results also suggest a broadening market: Since March, tech companies excluding Microsoft, NVIDIA, and Apple have revised 2024 profit estimates up by 7%. This wider growth makes global tech valuations of a 24x price-to-earnings ratio for 2025 appear reasonable," Marcelli said.
Nvidia is scheduled to report its quarterly results after Wednesday's market close.
— Jesse Pound
Target shares fall after earnings miss
Target shares were down nearly 7% in the premarket after the retailer reported weaker-than-expected earnings and a sales decline.
The company earned $2.03 per share, while analysts polled by LSEG expected a profit of $2.06 per share. Revenue was about in line with expectations at $24.53 billion. The results were driven by consumers purchasing fewer groceries and home goods at the retailer.
— Fred Imbert
Europe markets open lower
European markets opened lower on Wednesday, with all major bourses starting the day in the red, following the release of fresh U.K. inflation data.
The pan-European Stoxx 600 was last down 0.34% at 8:10 a.m. London time.
The U.K.'s FTSE 100 was 0.52% lower, with Germany's DAX down 0.4% and France's CAC 40 shedding 0.43%.
Autos dropped 2.3%, and oil and gas stocks lost 0.74%.
— Sophie Kiderlin
7 of the 11 S&P 500 sectors finished higher on Tuesday
Seven sectors out of the 11 total ended Tuesday's trading session with a gain.
Utilities led the moves higher, cinching a 0.97% gain for the day, followed by consumer staples and financials. On the other hand, energy was the biggest laggard, down 0.51%.
All sectors are less than 10% off their 52-week highs, while the tech sector saw a fresh record close in Tuesday's session.
— Lisa Kailai Han, Christopher Hayes
Stocks making the biggest moves after the bell: Urban Outfitters, Toll Brothers and more
These are the stocks moving the most in after-hours trading:
- Urban Outfitters — The clothing retailer added nearly 8% after beating estimates on its first-quarter results.
- Viasat — Shares of the communications company slid nearly 13% after Viasat posted a loss of 80 cents per share in the fiscal fourth quarter.
- Toll Brothers — Shares of the homebuilder advanced more than 1%. Toll Brothers posted fiscal second-quarter earnings of $4.55 per share on revenue of $2.65 billion. Analysts polled by LSEG called for earnings of $4.14 per share and $2.53 billion in revenue.
Read the full list of stocks moving here.
— Lisa Kailai Han
Stock futures are little changed
Stock futures for all three major indexes traded near flat Tuesday night just after 6 p.m. ET.
— Lisa Kailai Han
