The major stock market indexes reversed lower after the Federal Reserve held interest rates unchanged, but left the door open to more hikes. Health insurers fell after a leading health insurance company CEO’s comments.
X
Immediately after the Federal Open Market Committee (FOMC) announced its decision at 2. p.m. ET, the main indexes slid. The Fed said it wants to pause to gauge the impact of its tightening policy but indicated two more rate increases are still on the table.
“Holding the target range steady at this meeting allows the Committee to assess additional information and its implications for monetary policy,” the policy statement said.
Chair Jerome Powell will hold a news conference at 2:30 p.m. The market expected the Fed to skip a rate hike this time around, and potentially hike a quarter point at the July 26 meeting.
Before the Fed announcement, the CME FedWatch tool showed analyst consensus of over 50% odds for a quarter-point hike at the July meeting.
The 10-year U.S. Treasury yield was flat at 3.84% after the news, after falling 5 basis points before the announcement.
The May final Producer Price Index fell 0.3% vs. the 0.1% drop consensus. The year-over-year number rose 1.1% vs. the 1.6% increase expected, and was lower than the prior 2.3%. The core number excluding food and energy rose 0.2% and was in line with projections. The year-over-year figure increased 2.8% vs. the 2.9% projected, which slowed from the prior month’s 3.2% increase.
Index Moves
The Nasdaq fell 0.5% after 11 a.m. ET. The Dow Jones Industrial Average slid 1.1%. The S&P 500 lost 0.5% also. The Russell 2000 dropped 1%.
The Innovator IBD 50 ETF (FFTY) reversed to a 1.5% loss.
NYSE and Nasdaq volume fell from Tuesday’s levels at the same time.
Crude oil fell 0.5% to $69.10 per barrel. Gold futures edged 0.5% higher. The price of Bitcoin edged up 0.3% to $26,005. Coinbase (COIN) reclaimed 2.9%.
European stocks closed higher, with the German DAX and Paris CAC rising 0.5%. The London FTSE gained 0.1%.
Stock Market Movers: Oracle Hovers Near A 52-Week High
Oracle (ORCL) rallied 4.6% in heavy volume, after Goldman Sachs raised its price target to 120 from 75 and maintained its neutral rating on the stock.
Oracle shares gapped up 6% on Tuesday, following the company’s better-than-expected May-quarter results late Monday. Shares of the database software and cloud computing stock hit a 52-week high on Wednesday.
Advanced Micro Devices (AMD) gained 1% after Reuters reported Amazon.com (AMZN) is considering AMD’s newest AI chip for its AWS cloud-computing business.
The chip stock has climbed more than 20% from its 102.43 buy point, so investors who bought at that level can take some profits. Shares have held onto gains from the late May chip-stock rally. Several analysts raised their price targets on AMD Wednesday.
AI chip leader Nvidia (NVDA) added another 2.1% to its big run. Shares have gained over 180% this year so far.
Logitech (LOGI) tumbled over 10% on news its president and CEO, Bracken Darrel, is stepping down as of Tuesday, but will stay on to help with the transition to find a new leader.
The computer peripherals company that did so well during the pandemic has struggled with declining sales and earnings for six consecutive quarters.
The sharp drop sent shares below the 50-day moving average, a warning sign.
Medical Insurer Stocks Sell Off
UnitedHealth Group (UNH) tumbled over 7% after its CEO, Tim Noel, announced increased nonurgent surgeries in seniors in the last two months. The rise is likely to raise costs for health insurers in the second quarter. UNH is the Dow Jones’ biggest loser today.
Rival Humana (HUM) plunged 12% in huge volume in sympathy with UNH. Humana was already trading below the 50-day moving average and fell below the 200-day moving average on Wednesday, a red flag. HUM is the S&P 500’s biggest loser today.
CVS Health (CVS), which owns Aetna, sank 6.6% in heavy volume along with the group.
Meanwhile, medical products and services stock Steris (STE) gained 3.4% and broke out of a cup-with-handle base with a 212.81 buy point. But volume is light.
Other medical device stocks got a lift from UnitedHealth’s comments.
Follow Kimberley Koenig for more stock market news on Twitter @IBD_KKoenig.
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