Stocks decline as interest rate uncertainty, earnings weigh

It was yet another volatile seesaw day across the board with the Dow swinging from a high of a +240 to a low of a -190. The S&P and Nasdaq did not fare nearly as well, spending the entire day seesawing in the red and closing at or near their lows. The trigger again was the delay in rate cuts which impacts the tech-heavies much more than the Dow. It was also a not great day for Q1 earnings which was another pull-on equities. As inflation heats up and rate cut expectations cool down, plus the turmoil in the Middle East, the S&P is on course for its third straight weekly loss.  Volume remains below the 4-week average at 10.8 billion.  

Stocks decline as interest rate uncertainty, earnings weigh

By Chuck Mikolajczak

Wed April 17, 2024 4:30 PM

DJ: 37,798.97  +63.86        NAS: 15,865.25  -19.77        S&P: 5,051.41  -10.41      4/16

DJ: 37,753.31  -45.66         NAS: 15,683.37  -181.88      S&P: 5,022.21  -29.20      4/17

NEW YORK, April 17 (Reuters) - U.S. stocks fell in choppy trading on Wednesday as investors assessed the Federal Reserve's interest rate stance and a batch of soft earnings early in the financial reporting season.  Travelers(TRV.N), opens new tab tumbled 7.41% and was among the biggest drags on the S&P 500 and largest on the Dow Industrials after the insurance giant missed Wall Street expectations for first-quarter profit.  Also weighing on the benchmark S&P index (.SPX), opens new tab after quarterly results were Prologis(PLD.N), opens new tab, with the warehouse-focused real estate investment trust dropping 7.19%, and Abbott Laboratories(ABT.N), opens new tab, which fell 3.03% after topping quarterly estimates but disappointing on its annual forecast.

After a rally in the last two months of 2023 that extended into the first quarter, equities have struggled with the S&P 500 registering its fourth straight session of declines. The index is on pace for its third straight weekly loss as investors have dialed back expectations for the timing and size of the Fed's rate cuts.  On Tuesday, U.S. central bank officials including Fed Chair Jerome Powell backed away from providing guidance on when rates may be cut, saying instead that monetary policy needs to be restrictive for longer.

"The markets are dealing with a couple things - inflation is hotter than most expect, rate cut expectations are coming down and we've had a ramp higher in geopolitical tensions, particularly out of the Middle East," said Anthony Saglimbene, chief market strategist at Ameriprise Financial in Troy, Michigan.  "It's just an excuse for traders to kind of move to the sidelines and markets to kind of take a breath after a really, really strong five months of gains."

The Dow Jones Industrial Average (.DJI), opens new tab fell 45.66 points, or 0.12%, to 37,753.31, the S&P 500 (.SPX), opens new tab lost 29.20 points, or 0.58%, to 5,022.21 and the Nasdaq Composite (.IXIC), opens new tab lost 181.88 points, or 1.15%, to 15,683.37.  The four-session S&P 500 sell-off is the longest in just over four months, matching a four-day run of declines ended on Jan. 4.

Fed Board Governor Michelle Bowman and Cleveland Fed President Loretta Mester are scheduled to speak later in the day. The Fed's Beige Book survey of economic activity showed a slight expansion from late February through early April and companies feared that progress in lowering inflation would stall.  After the market began to largely price in a June cut from the Fed earlier this year, expectations for a cut of at least 25 basis points have shriveled to 16.8%, and for a July cut to 46%, CME'sFedWatch Tool, opens new tabshowed.  Stocks pared losses as U.S. Treasury yields eased further from the previous day's multi-month highs following a strong auction of 20-year bonds , with the 10-year note last around 4.59%.

Among gainers, United Airlines (UAL.O), opens new tab surged 17.45% after it forecast stronger-than-expected current-quarter numbers, helping to boost the NYSE Arca airline index (.XAL), opens new tab by 3.82%. its biggest daily percentage jump since Feb. 6.  JB Hunt Transport Services (JBHT.O), opens new tab slumped 8.12% as the worst performer on the S&P 500 after the trucking firm missed Wall Street estimates for first-quarter results.  U.S. Bancorp (USB.N), opens new tab dropped 3.61% after the lender cut its forecast for full-year interest income and reported a 22% fall in first-quarter profit.

On the NYSE declining issues outnumbered advancers by a 1.1-to-1 ratio and a 1.54-to-1 ratio on the Nasdaq.  The NYSE had 21 new highs and 103 new lows. On the Nasdaq, there were 27 new highs and 240 new lows.

Volume on U.S. exchanges was 10.8 billion shares, compared with the 11.05 billion average for the full session over the last 20 trading days.