The Dow Jones Industrial Average pared early losses and traded midday Wednesday. Fed Chairman Jerome Powell asserted that interest rates will continue to rise in his testimony to Congress. Powell observed that “inflationary pressures continue to be high and the process of bringing inflation down to 2% still has a long way to go.”
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The Fed Chairman said in prepared remarks for his speech to a meeting of the House Financial Services Committee that “almost all FOMC participants expect it to be appropriate to raise a little more interest rate by the end of the year”.
The pause in rates last week was a “cautious” step, he said, to allow the committee to assess the effects of his tightening. The Fed Chairman will address the Senate Banking Committee on Thursday.
Last week, the Fed suspended tightening and left interest rates unchanged while indicating that two more rate hikes may be needed to rein in inflation. A hike after the July meeting would take the rate to 5.25%.
The S&P 500 fell 0.4% while the Nasdaq lagged, falling 1.3% as of noon ET.
The small cap Russell 2000 slid 0.5% and the Innovator IBD 50 (FFTY) ETF fell 1.3%.
Volume on the NYSE fell but rose on the Nasdaq from the same time on Tuesday.
Crude oil prices rose more than 1% to trade at $72.19 a barrel.
The yield on the benchmark 10-year Treasury note rose 4 basis points to 3.77%.
Dow Jones Stocks in Brief
Apple (AAPL) continued to track a rising 10-day moving average, according to IBD MarketSmith. The shares were down slightly in light volume on the hour. Walgreens (WBA) is trying to get its 50-day line back before next week’s results.
Shares of Adobe (ADBE) rose at the opening bell but reversed lower at noon. Earlier, BMO Capital Markets analyst Keith Bachman raised his price target to 570 with an improved outperformance rating due to a boost from artificial intelligence technologies.
Exact Sciences (EXAS) fell despite positive results from its study to evaluate its next-generation Cologuard treatment for colon cancer. The original Cologuard was approved in 2014.
Homebuilders and medical stocks under scrutiny
Outside of the Dow Jones, Meritage Homes (MTH) is in a buy zone after breaking a buy point of 130.68 on Tuesday. It was also Tuesday’s Stock of the Day. Knowledge base home (KBH) is on deck to report its income on Wednesday as the parent of Olive Garden restaurants Darden (IRD) and Accenture (ACN) report Thursday. KBH and DRI rose as ACN tests its 10-day line.
On the IBD 50, growth value TransMedics (TMDX) is above its 50-day line in a cut basis with a buy point of 90.15. Lantheus Enterprises (LNTH) resumed its 50-day line on Tuesday. The medical products stock pared its gains on Wednesday. Generac (GNRC), on the IBD rankings, is in a cut base with an entry of 141.54.
Outside the Dow Jones: Tesla, Amazon
Somewhere else, You’re here (TSLA) fell after Barclays analyst Dan Levy downgraded the stock to keep it long, but raised its price target to 260 from 220.
Spotify (SPOT) also fell although analysts at Wolfe Research gave it a price target of 190 with an outperform rating.
Amazon (AMZN) slipped slightly after Jefferies raised its price target from 135 to 150. The shares are trading above the 10-day line.
Dow Jones Stock Nike (NKE) got a reduced price target at 135 vs. 140 from Telsey Advisory Group. Analysts maintained an outperform rating for the stock. Shares rose slightly at midday Wednesday.
Oppenheimer analysts have raised their price target to Uber (UBER) at 65 to 55. UBER stock, however, reduced its initial gains. It is on the IBD and IBD 50 rankings.
Shares of fedex (FDX) fell below the 50-day line after the shipping company reported a disappointing 2024 profit outlook. Weak demand is expected to offset a $4 billion cost-cutting effort. United Parcel Service (UPS) fell in sympathy.
PayPal (PYPL) fell midday on Wednesday after Tuesday’s big gain as investment firm KKR agreed to buy $44 billion in loans on PayPal’s balance sheet. The stock crossed its 50-day line on Tuesday and tests it on Wednesday.
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