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Stocks fall as Wall Street prepares for Fed rate decision

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Here’s how the market has done on Fed day during Powell’s tenure

Bespoke Investment Group compiled data on how well the market has done on Fed days during Chair Jerome Powell’s tenure. During that time, the S&P 500 has averaged a 0.29% gain on Fed days, “leaving him behind Bernanke but ahead of Yellen and Greenspan.”

Fed days have been volatile in 2022, with the S&P 500 posting moves of more than 1% in five of the last six.

— Fred Imbert

Decliners lead advancers 3-1 at NYSE

Market breadth was negative in early trading, with roughly three New York Stock Exchange-listed stocks declining for every advancer. Overall, 2,006 NYSE-listed names fell, while just 0746 advanced.

— Fred Imbert

Energy leading stocks lower

The S&P 500 energy sector lagged in early trading Wednesday, falling about 1.7%, as traders braced for the Fed’s latest monetary policy decision. Real estate also fell more than 1%.

Overall, every S&P 500 sector traded lower on the day.

— Fred Imbert

A ‘data dependent’ Fed on future hikes could move markets higher, Cramer says

The market is already pricing in a 75 basis point hike from the Federal Reserve, but it could rally if Chair Jerome Powell indicates future increases will be based on economic data, CNBC’s Jim Cramer said Wednesday.

“Three-quarters and data dependent, I think we are home free, but three-quarters and more vigilant, then I think we have a sell-off,” Cramer said on “Squawk Box.”

While there hasn’t been data to support the theory that the economy is cooling off, Cramer hopes the central bank takes a wait-and-see approach.

“Tech has been bad, but non-tech has been good,” Cramer said. “I would hate to see non-tech join tech in the decline.”

— Michelle Fox

Rogers shares tumble as DuPont deal collapses

Shares of Rogers Corp, the engineering materials maker, tumbled on Wednesday after a planned $5.2 billion sale of the company to DuPont De Nemours was terminated.

“Rogers is currently evaluating all options to determine the best path forward in response to DuPont’s notice,” the company said in a statement.

DuPont said after the close on Tuesday that the companies have been unable to obtain clearance from all required regulators in a timely manner. The deal was first announced on Nov. 1 of last year.

Rogers shares cratered more than 43%, while DuPont’s stock rose about 6%.

Stocks open lower as market braces for Fed decision

Stocks opened lower as Wall Street awaited the Fed’s lastest policy decision.

The Dow Jones Industrial Average fell 95 points, or roughly 0.3%. The S&P 500 futures and Nasdaq Composite edged down 0.3% and 0.2%, respectively.

— Samantha Subin

As Fed meets, traders are betting it stops hiking rates at just above 5% next year

Investors in the fed fund futures market are betting the Federal Reserve will take its fed funds rate just above 5% before stopping rate hikes next year.

The Federal Reserve was meeting Wednesday and is expected to raise its fed funds rate by 75 basis points when it releases a policy statement at 2 p.m. ET.

The May contract was priced for 5.02% Wednesday morning. The Fed is currently targeting fed funds in a range of 3% to 3.25%.

“Over the last two weeks, it’s been bouncing around 5%,” said Ben Jeffery, BMO rate strategist. He said the futures market is also pricing for a 75 basis point rate hike for Wednesday afternoon and is giving more than 50/50 odds to a 50 basis point hike in December. A basis point equals 0.01 of a percentage point.

“The base case is 75 today, 50 in December and 25 in February,” said Jeffery.

Market pros expect the Fed will also signal Wednesday that it could begin raising rates at a slower pace, starting in December.

That signal could come from Fed Chairman Jerome Powell when he speaks to the media at 2:30 p.m. ET.

“Until we hear from Powell at 2:30, I think this is just noise,” said Michael Schumacher of Wells Fargo.

— Patti Domm

 

U.S.-listed China stocks rise on reopening speculation

Shares of Chinese companies listed in the U.S. rose again during Wednesday’s premarket trading amid rumors that China may pivot from its strict zero-Covid policy.

The KraneShares CSI China Internet ETF gained more than 2%, building on Tuesday’s 5.5% advance. The iShares China Large-Cap ETF added roughly 1%.

Individual stocks including Alibaba and Pinduoduo added 1% each.

— Samantha Subin

KeyBanc expects a more difficult holiday season for toy industry

This holiday season, the toy industry won’t see the double-digit growth it enjoyed for the past two years, according to KeyBanc Capital Markets.

Toy sales in 2020 and 2021 were fueled by stimulus, increased savings and stay-at-home activity.

“We believe current macroeconomic uncertainty, inflationary pressures, and restrictive financial conditions create a more difficult environment,” analyst Bradley Thomas wrote in a note Tuesday.

Consumers have already been pulling back from discretionary purchases at Target and Walmart this year, he noted. Mattel and Hasbro have also recently said they are preparing for more promotions compared to last year.

Thomas believes Ollie’s Bargain Outlet Holdings is best positioned this season thanks to its high-quality and robust inventory and closeout deals.

— Michelle Fox

Paramount Global, Estee Lauder and Caesars Entertainment among stocks making the biggest premarket moves

Companies reporting earnings results were among the stocks making the biggest moves during Wednesday’s premarket.

Paramount Global – The media company’s stock dove 8% in the premarket after it missed top and bottom line expectations for the recent quarter.

Caesars Entertainment – Caesars’ stock rallied 7.7% in premarket trading after the resort operator topped analyst estimates for both the top and bottom lines. Caesars also said its digital betting business turned profitable on an adjusted basis for the quarter, 12 months ahead of the company’s target.

Estee Lauder – The cosmetics maker’s stock sank 9.5% in premarket trading after it issued a weaker-than-expected outlook. Estee Lauder cited higher costs, a stronger U.S. dollar and Covid lockdowns in China among the reasons for the disappointing forecast.

— Peter Schacknow, Samantha Subin

ADP private payrolls, wages increased in October

The ADP Employment report for October showed that the private labor market is maintaining its strength even as interest rates rise and the Federal Reserve looks to cool off high inflation.

Private sector employment increased by 239,000 in October, the Wednesday report showed. The service sector added the bulk of jobs during the month, with large gains in hiring in leisure and hospitality and transportation, trade and utilities.

In addition, annual pay was up 7.7% on the year, but the momentum in wage gains is ebbing, according to the report. People who changed jobs were able to get a 15.2% pay increase in October, down from a 15.7% jump in September.

The ADP report comes just days before October nonfarm payrolls are released by the Bureau of Labor Statistics.

—Carmen Reinicke, Jeff Cox

Advanced Micro Devices jumps 6% despite earnings miss

Shares of Advanced Micro Devices rose 6%in premarket trading after posting results after the bell Tuesday that missed on both the top and bottom lines.

While the chipmaker fell short of Wall Street’s expectations for its fiscal third quarter, revenue from all four of its business segments came in ahead of what the company projected in its October warning.

AMD reported adjusted earnings of 67 cents per share on $5.57 billion in revenue. Analysts surveyed by Refinitiv had anticipated earnings of 68 cents a share on $5.62 billion in revenue.

On a year-over-year basis, revenue grew 29%.

— Samantha Subin, Jordan Novet

Wheat futures fall as Russia agrees to resume grain exports

Wheat futures fell sharply on Wednesday morning after Russia announced that it would resume grain exports on the Black Sea.

Russia withdrew from an export deal over the weekend, but said Wednesday it is has received assurances from Ukrainian officials that the shipping lanes would not be used for military purposes. Ukraine is a major global wheat exporter, and Russia’s invasion has disrupted supply.

Wheat futures in Chicago fell 6% on Wednesday, though they are still higher on the week. Corn futures dipped about 2%.

— Jesse Pound, Holly Ellyatt

Mortgage demand flat even as rates dip

Mortgage demand was flat last week, with application volume pulling back 0.5% over the previous week even as rates dropped, according to the Mortgage Bankers Association’s seasonally adjusted index.

Rates, meanwhile, fell slightly but hovered near a 22-year high.

Refinance applications rose 0.2% for the week but are still down 85% year over year. Mortgage applications to buy a home fell by 1%. That represents a 41% decline over the same week last year.

— Diana Olick, Samantha Subin

Twilio down 4% after Bank of America double-downgrades

Shares of Twilio, the maker of programmable tools allowing businesses to send and receive calls and texts, dropped nearly 4% in pre-market trading.

The dip followed a double-downgrade from Bank of America and price target cut for the stock. While the bank still expects share value to go up 13% in the next year, that’s down from the previously expected 133%.

Bank of America’s downgrade comes on the back of a survey showing just over half of respondents plan to spend the same or less on the company’s platform in 2023 compared to this year.

CNBC Pro subscribers can get the full story here.

CVS shares pop on earnings beat

Shares of CVS Health popped 5% after the pharmacy operator reported third-quarter earnings and revenue that beat expectations.

CVS earned $2.09 per share on revenue of $81.16 billion. Analysts expected earnings per share of $1.99 on revenue of $76.75 billion, according to Refinitiv.

The company also raised its full-year outlook.

— Jack Stebbins

Salesforce going down ‘Microsoft pathway,’ Macquarie says

Salesforce got an outperform rating from Macquarie, with analyst Sarah Hindlian-Bowler noting that the company’s recent C-suite moves likely saved itself 10 years of underperformance and put it “down the Microsoft pathway.”

Additionally, the analyst thinks Salesforce is less likely to be hit by global macro headwinds while entering a period of “graceful maturation.”

CNBC Pro subscribers can read the full story here.

— Alex Harring

World’s largest container shipping firm Maersk, a barometer for global trade, warns of ‘dark clouds on the horizon’

Maersk, the world’s largest container shipping firm, on Wednesday posted record profits for the third quarter on the back of high ocean freight rates, but noted a slowdown in demand.

The Danish giant, widely seen as a barometer for global trade, reported earnings before interest, tax, depreciation and amortization (EBITDA) of $10.9 billion for the quarter, above consensus analyst projections of $9.8 billion and up around 60% from the same period a year ago.

CEO Søren Skou said the “exceptional results” this year were driven by a continued rise in ocean freight rates, but said it was clear that these have peaked and warned of “dark clouds on the horizon.”

Read the full story here.

– Elliot Smith

European markets muted as investors focus on the Fed’s next move

European markets were cautious on Wednesday as global investors focused on the conclusion of the Fed’s policy meeting.

The pan-European Stoxx 600 index was fractionally higher by mid-morning in London, having given up opening gains of around 0.4%. Health care stocks added 1.2% while autos shed 0.5%.

Ed Yardeni says he sees another 75-basis-point Fed hike in December

The Fed may hike 75 basis points again in December, says Ed Yardeni

Federal Reserve Chairman Jerome Powell could indicate another 75-basis-point hike is coming in December after an expected increase in November, Ed Yardeni of Yardeni Research said.

After the predicted hike in December, Powell may hint that “the Fed funds rate is in restrictive territory now, and that they’re just going to keep it there for a while to see how it impacts the economy,” he said on CNBC’s “Squawk Box Asia.”

Yardeni said he thinks the Fed wants to frontload their hikes instead of raising rates by 50 basis points, followed by two 25-basis-point increases.

— Abigail Ng

CNBC Pro: Goldman’s Currie reveals ‘the best’ hedge against inflation, rate hikes and geopolitical risks

Goldman’s Jeff Currie says there’s one investment that can protect investors from rising interest rates, inflation, and geopolitical risk.

Currie, global head of commodities research at Goldman Sachs, said it has 20-30% growth potential in the short term, with additional upside risks to the price target.

CNBC Pro subscribers can read more here.

— Ganesh Rao

Stocks making the biggest moves after hours

These are some of the companies making big moves in extended trading.

  • Match Group — Shares of the dating app operator jumped 16% after the company posted higher-than-expected revenue for the third quarter, according to StreetAccount.
  • Airbnb — The lodging stock fell about 6.8% after hours even after the company reported better-than-expected quarterly earnings and revenue.
  • Advanced Micro Devices — The chipmaker saw its shares rise more than 4% after quarterly results from all four of its business segments were better than the company had called in its October warning.

Stock futures open flat

Stock futures were flat on Tuesday night as investors looked ahead to another Federal Reserve at the conclusion of its two-day policy meeting Wednesday.

Futures tied to the Dow Jones Industrial Average were lower by 20 points. S&P 500 futures and Nasdaq 100 futures traded just below the flat line.

— Tanaya Macheel





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