Stocks Close Mixed As Fed Announcement Looms - U.S. Commentary

(RTTNews) - After coming under pressure in morning trading, stocks turned mixed over the course of the trading session on Wednesday. The Dow and the S&P 500 bounced off their lows and into positive territory, while the tech-heavy Nasdaq remained stuck in the red.

While the Nasdaq fell 54.09 points or 0.7 percent to 8,107.77 after ending the previous session at a record closing high, the Dow rose 38.52 points or 0.2 percent to 26,592.91 and the S&P 500 crept up 2.80 points or 0.1 percent to a new record closing high of 2,945.83.

A steep drop by shares of Alphabet (GOOGL) contributed to the loss posted by the Nasdaq, with the parent of Google plunging by 7.5 percent.

The sell-off by Alphabet comes after the company reported first quarter earnings that exceeded analyst estimates but on weaker than expected revenues.

On the other hand, shares of General Electric (GE) moved significantly higher after the industrial conglomerate reported first quarter results that exceeded analyst estimates.

Fast food giant McDonald's (MCD) posted a much more modest gain after reporting better than expected first quarter results.

The mixed performance on Wall Street also came as traders looked ahead to the announcement of the Federal Reserve's latest monetary policy decision on Wednesday.

The Fed is widely expected to leave interest rates unchanged, although traders are likely to keep a close eye on the accompanying statement and Fed Chairman Jerome Powell's subsequent press conference.

A day ahead of the Fed announcement, President Donald Trump urged the central bank to slash interest rates by as much as a full percentage point.

"Our Federal Reserve has incessantly lifted interest rates, even though inflation is very low, and instituted a very big dose of quantitative tightening," Trump said in a post on Twitter.

He added, "We have the potential to go up like a rocket if we did some lowering of rates, like one point, and some quantitative easing."

Some analysts accused the Fed of capitulating to Trump's demands by revealing after its last meeting that officials no longer expect to raise rates this year.

Traders largely shrugged off some upbeat economic data, with reports showing bigger than expected rebounds in consumer confidence and pending home sales.

Sector

Utilities stocks showed a strong move to the upside over the course of the session, driving the Dow Jones Utilities Average up by 1.6 percent to a record closing high.

Interest rate sensitive commercial real estate stocks also saw notable strength, as reflected by the 1 percent gain posted by the Dow Jones U.S. Real Estate Index.

On the other hand, oil service stocks moved sharply lower on the day, dragging the Philadelphia Oil Service Index down by 2.5 percent to its lowest closing level in over a month.

The weakness in the oil service sector came despite an increase by the price of crude oil, with crude for June delivery rising $0.41 to $63.91 a barrel.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance on Tuesday, as the Japanese markets remained closed. China's Shanghai Composite Index climbed by 0.5 percent, while Hong Kong's Hang Seng Index slid by 0.7 percent.

The major European markets also ended the day mixed. While the U.K.'s FTSE 100 Index fell by 0.3 percent, the German DAX Index and the French CAC 40 Index both inched up by 0.1 percent.

In the bond market, treasuries moved back to the upside following the pullback seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, dropped 2.7 basis points to 2.509 percent.

Looking Ahead

The Fed's monetary policy announcement is likely to be in focus on Wednesday, with the central bank widely expected to leave interest rates unchanged.

Ahead of the Fed announcement, trading may be impacted by reaction to reports on private sector employment, manufacturing activity, and construction spending.

On the earnings front, Apple (AAPL), Advanced Micro Devices (AMD), Amgen (AMGN), and Groupon (GRPN) are among the companies releasing their quarterly results after the close of today's trading.

Clorox (CLX), CVS Health (CVS), Hilton (HLT), Humana (HUM), Sprint (S), and Yum! Brands (YUM) are also among the companies due to report their results before the start of trading on Wednesday.