The Dow Jones Industrial Average experienced a decline following the release of the latest Federal Reserve minutes, where central bankers continued to express concerns about inflation, keeping the possibility of further tightening on the table. Simultaneously, Amazon.com (AMZN) shares slid as founder Jeff Bezos unloaded millions of shares, and Nvidia (NVDA) reported positive earnings, but the stock fell in late trading.
Federal Reserve’s Persistent Concerns
Despite a cautious tone from Fed Chair Jerome Powell in the last meeting, the recently released minutes revealed that Fed members are still worried about persistent or rising inflation. This contradicts the expectation on Wall Street that the central bankers might be done with interest rate hikes. The minutes emphasized the importance of maintaining a sufficiently restrictive monetary policy to bring inflation back to the Committee’s 2-percent objective over time. Importantly, there was no indication of when the Fed might consider easing rates, and the minutes supported Powell’s earlier statement that the FOMC is not currently contemplating rate cuts.
Market Reactions and Economic Indicators
Following the release of the Fed minutes, Treasury yields fell, with the 10-year and 30-year notes sliding 1 basis point each. The U.S. Dollar Index briefly undercut its 200-day moving average, potentially signaling a level to watch in the coming sessions. LPL Financial Chief Economist Jeffrey Roach noted that the committee appears to be in a ‘wait and see’ mode, expecting Powell and other committee members to maintain a hawkish tone, even though the market anticipates a rate cut by mid-2024.
Tech Struggles and Small Cap Dive
The Nasdaq struggled the most among major indexes, falling 0.6%, with Sirius XM (SIRI) and chip maker GlobalFoundries (GFS) among the worst performers. The S&P 500 fell a more modest 0.2%, with Jacobs Solutions (J) plunging 8.7%. Small caps were hit hard, with the Russell 2000 diving 1.3%, and growth stocks, represented by the Innovator IBD 50 ETF (FFTY), sliding 0.8%.
Dow Jones Today: Mixed Performance
The Dow Jones industrials experienced a relatively modest dip of 0.2%, with Microsoft (MSFT) and Intel (INTC) being notable laggards. Microsoft fell 1.2%, while Intel lagged the most, losing 2.5%. On a positive note, insurance play Travelers (TRV) and Verizon Communications (VZ) fared well, rising 1.7% and 1.4%, respectively.
Bezos Unloads Amazon Stock
Amazon stock closed 1.5% lower as founder Jeff Bezos continued to sell shares, with reports suggesting he might unload 8 million to 10 million shares, amounting to around $1 billion. Bezos is selling Amazon shares to fund philanthropic endeavors and support his space company, Blue Origin. The stock was also impacted by disappointing quarterly reports from retailers Best Buy (BBY) and American Eagle Outfitters (AEO).
Nvidia Reports Earnings
Nvidia (NVDA) reported positive earnings, beating views, but the stock fell 0.9% after hours. The company’s EPS came in at $4.02, with revenue at $18.12 billion. Nvidia stock is trading at the top of its buy zone, up nearly 250% in 2023.
Outside Dow Jones: Stocks Near Entries
Amid favorable market conditions, several stocks are attempting breakouts. Braze (BRZE), Moody’s (MCO), Golub Capital (GBDC), and Gen Digital (GEN) are all testing entries. Braze and Moody’s are in buy zones after clearing consolidation patterns, while Golub Capital is in a buy zone after turning in an earnings beat. Gen Digital tested a cup base entry.
