NEW YORK: The benchmark S&P 500 and the blue-chip Dow were nearly flat on Wednesday as investors took a breather from a rally that was sparked by the Federal Reserve’s likely pivot to a dovish policy, while FedEx tumbled after issuing a grim outlook.
Propping up the tech-heavy Nasdaq, Alphabet climbed 3.1% to an over one-and-a-half year high after a report said Google is planning to reorganize a big part of its 30,000-person ad sales unit, citing a person with knowledge of the situation.
The three main indexes had advanced over 2% since the Fed’s Dec. 13 meet where policymakers projected lower policy rates by the end of 2024, with the Dow notching fresh record highs and the S&P 500 within arm’s reach of its highest closing levels since January 2022.
Since then, central bank officials have attempted to keep investor euphoria in check, the latest being Chicago Fed President Austan Goolsbee who said further progress on beating back inflation will be the decisive factor in any central bank decision next year to reduce interest rates.
Still, traders expect the Fed to ease credit conditions by over 125 basis points by September next year, with a 79% chance that the first cut of at least 25 basis points could come in as early as March 2024, according to the CME Group’s FedWatch tool.
Some analysts, however, pointed that the market expectations around rate cuts might be too aggressive.
“(Investors) think that they (Fed) will cut rates more than the Fed is willing to admit that they are likely to cut rates,” said Sam Stovall, chief investment strategist at CFRA Research.
Stovall added that with most of the stocks trading above their 50-day moving average, likely indicating over valuation, “the market is due for some near-term digestion of gains.” Meanwhile, FedEx slid 11.0% after the global delivery firm cut its full-year revenue forecast and reported quarterly profit that fell far short of analysts’ targets.
Volatile macroeconomic conditions, muted retailer restocking and reduced demand from the company’s largest Express customer, the US Postal Service (USPS), dealt a blow to the company’s air delivery business.
The results also dragged down shares of rival United Parcel Service by 1.4%.
At 11:28 a.m. ET, the Dow Jones Industrial Average was up 15.65 points, or 0.04%, at 37,573.57, the S&P 500 was up 2.53 points, or 0.05%, at 4,770.90, and the Nasdaq Composite was up 35.22 points, or 0.23%, at 15,038.45.
Six of the top 11 S&P 500 sectors were in declines, though the communications services sector added 1.6%, underpinned by gains in Alphabet.
General Mills slipped 2.8% after the Cheerios cereal-maker trimmed its annual sales forecast due to slowing demand for its higher-priced products.
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