Stock Market Today: S&P closes lower in wild ride as Fed keeps rate unchanged

Investing.com–U.S. stocks steadied Wednesday as investors digested solid labor market data and a deluge of earnings ahead of the conclusion of a Federal Reserve meeting.

09:50 ET (13:50 GMT), Dow Jones Industrial Average climbed 25 points, or 0.1%, while S&P 500 fell 10 points, or 0.2%, lower, while NASDAQ Composite slipped 5 points, or 0.1%.

U.S. labor market remains strong

The U.S. private sector added more jobs than expected in April, according to data released earlier Wednesday, as private sector employment increased by 192,000 jobs last month, according to data from payrolls processor ADP, above the 179,000 expected.

Additionally, March’s job gains were revised up to 208,000 from 184,000.

This continued strength in the labor market could tempt the Federal Reserve policymakers to hold back on interest rates cuts this year, given they are already having to cope with inflation remaining stronger than had been originally expected.

The Fed concludes its policy meeting later in the session, and is widely expected to keep rates on hold.

The focus is likely to be on the accompanying comments from Fed Chair Jerome Powell, who could well offer a hawkish outlook given the relatively strong economic data of late. 

Markets currently expect the Fed to begin cutting rates in September, and barely see a single quarter-point rate cut by year-end – a far cry from as many as five such cuts at the start of the year. 

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The prospect of higher-for-longer interest rates bodes poorly for stocks, given that it likely weighs on economic activity as well as limiting the amount of liquidity in the economy, which is usually directed towards equity investing. 

The major Wall Street indices struggled in April, snapping five-month winning streaks.

Earnings deluge continues  

The earnings reports continued to pour out Wednesday.

Kraft Heinz (NASDAQ:KHC) stock fell almost 5% after the food giant missed expectations for first-quarter sales, as inflation-weary consumers pushed back on higher prices of its products.

Yum! Brands (NYSE:YUM) stock fell over 3% after the restaurant group reported a surprise fall in quarterly global same-store sales, hurt by choppy demand for its KFC and Pizza Hut brands from inflation-weary consumers.

Estee Lauder (NYSE:EL) stock fell 5% after the beauty products company as its earnings and revenue topped consensus expectations, but guidance fell short of consensus estimates, while CVS Health (NYSE:CVS) stock slumped 18% after the pharmacy chain reported a decline in first-quarter profits and slashed its full-year earnings outlook.

On the flip side, Pfizer (NYSE:PFE) stock rose 3% after the drugmaker topped first-quarter expectations, and boosted its full-year outlook.

Elsewhere, Amazon (NASDAQ:AMZN) stock rose 3.5% after the e-commerce and tech giant reported solid first-quarter earnings beat estimates, even with its revenue forecast disappointing. 

Advanced Micro Devices (NASDAQ:AMD) slid nearly 5% after the chipmaker said it expects AI chip sales of roughly $4 billion for 2024, an increase of $500 million from its prior estimate for the year. However, this was not enough to meet Wall Street’s lofty expectations. 

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 Coffee chain Starbucks Corporation (NASDAQ:SBUX) tumbled 15% after its first quarter profit missed expectations, while its revenue weakened on worsening demand in North America and China. 

Crude falls after US stockpiles build  

Crude prices fell Wednesday, continuing the recent weak tone after a surprise build in U.S. stockpiles and strong crude production sparked doubts over tight supply conditions. 

By 09:50 ET, the U.S. crude futures traded 1.1% lower at $81.00 a barrel, while the Brent contract dropped 1.1% to $85.38 per barrel.

The American Petroleum Institute indicated late Tuesday that U.S. crude inventories grew by much more than expected last week.

This suggested that oil supplies were not as tight as initially expected in the world’s biggest fuel consumer, a notion reinforced by separate data showing U.S. domestic crude output rose to 13.15 million barrels per day in February from 12.58 million barrels in January, just short of the record high and its biggest jump since October. 

Official figures from the Energy Information Administration are due later in the session.

Crude prices slid to over three-week lows on Monday on growing expectations that a ceasefire agreement between Israel and Hamas could be in sight, reducing tensions in the region and cutting the likelihood of oil supplies being disrupted.

(Ambar Warrick contributed to this article.)