US Stocks Struggle To Advance As Investors Digest Earnings, Evaluate Fed Rate Hike Path

U.S. major indices continued to trade in a tight range on Wednesday, failing to extend the five-week rally as investors assess the future of interest rate path from the Federal Reserve.

Earnings remain at the forefront of the market, with several mega-cap companies set to report in the coming hours, including Tesla, Inc. TSLA after market close today, Philip Morris International Inc. PM, AT&T Inc. T, and American Express Company AXP on Thursday. 

Cues From Wednesday's Trading:

Major U.S. equity indices sent mixed signals. The S&P 500 index eased 0.1%, the Nasdaq 100 was 0.1% higher and the Dow Jones Industrial Average eased 0.2%. 

U.S. Indices' Performance On Wednesday

Index	Performance (+/-)		Value
Nasdaq Composite	-0.1%		12,165.41
S&P 500 Index	-0.07%		4,153.87
Dow Industrials	-0.23%		33,902.63

Analyst Color:

The Fed could stay on course despite the economic slowdown and raise rates at the upcoming May 2-3 meeting, according to Jeffrey Roach, the chief economist at LPL Financial.

“Businesses appeared to hunker down under the weight of tighter credit conditions and weaker economic growth. If small businesses are an accurate barometer, recession risks are rising and the labor market will likely cool in the coming months,” the analyst said. He does not rule out the possibility of a rate cut by the end of the year if the economy becomes more unstable.

Monday's Trading In Major US Equity ETFs: 

In midday trading Wednesday, the SPDR S&P 500 ETF Trust SPY was flat at $414.65, the SPDR Dow Jones Industrial Average ETF DIA eased 0.2% to $339.04 and the Invesco QQQ Trust QQQ rose 0.1% to $319.34, according to Benzinga Pro data.

Among U.S. equity sectors, the Metals & Mining Select Sector SPDR Fund XME underperformed, down 1.1%, followed by the Energy Select Sector SPDR Fund XLE, down 1%. The Utilities Select Sector SPDR Fund XLU outperformed, up by 0.5%. 

Latest Economic Data:

Mortgage Bankers Association reported that mortgage applications dropped 8.8% in the week ended April 14, reversing from a 5.3% rise in the previous week. 

The U.S. Energy Information Administration's most recent report showed that crude oil stocks fell by 4.581 million barrels in the week ending April 14. This was more than the 1.088-million-barrel drop that the market was expecting. 

The Federal Reserve will release the Beige Book, which contains anecdotal evidence of economic conditions in the 12 Federal Reserve districts. The report is due at 2 p.m. EDT.

The Treasury is set to auction 20-year bonds at 1 p.m. EDT.

New York Fed President John Williams is scheduled to speak at 7 p.m. EDT

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Stocks In Focus:

Morgan Stanley MS traded flat on the day, recovering early losses after the company reported lower than expected earnings in its first quarter. 

Western Alliance Bancorp. WAL jumped nearly 20% after the company reported its first-quarter results, showing a jump in deposits.

Netflix, Inc. NFLX fell over 1.3% after its mixed quarterly results.

• Intuitive Surgical, Inc. ISRG advanced close to 12% in reaction to its quarterly results.
• Meta Platforms, Inc. META retreated after a Bloomberg report said the company would announce more job cuts on Wednesday. Stock traded 1% lower. 
• Abbott Labs. ABT rose 7.5% after reporting better-than-expected results in Q1.  
• Baker Hughes Company BKR rose 3% after reporting better-than-expected results in Q1. 
• United Airlines Holdings UAL rose nearly 6% after reporting better-than-expected results in Q1. The company doesn't see much impact from Boeing's production problem. 
• Tesla, Inc. TSLA and Steel Dynamics STLD are among the notable companies reporting after the market close.

Top Analyst Calls

• Meta: BofA maintains Buy rating and ups price target from $230 to $250
• Exxon Mobil XOM: UBS upgrades from Neutral to Buy and raises price target from $125 to $144
• Netflix: UBS upgrades from Neutral to Buy and raises price target from $350 to $390
• Bank of America Corp. BAC: Citi maintains Neutral rating and reduces price target from $38 to $33.
• Apple, Inc. AAPL: JPMorgan maintains Overweight rating and increases price target from $175 to $190

Commodities, Bonds, Forex And Other Global Equity Markets:

Crude oil fell 2%, with a barrel of WTI-grade crude trading at $79.30. The United States Oil Fund ETF USO was 1.6% lower to $69.58 per share.  

Treasury yields rose further, with the 10-year yield surging by 2 basis points to 3.6% and the two-year yield surging 5 basis points to 4.25%. The iShares 20+ Year Treasury Bond ETF TLT was 0.3% lower on the day. 

The dollar slightly gained, with the U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF UUP, up 0.1%. The EUR/USD pair, which is tracked by the Invesco CurrecyShares Euro Currency Trust FXE, was flat at 1.0965.   

European equity indices closed in the green. The iShares MSCI Eurozone ETF EZU was unchanged on the day.  

Gold eased 0.4% to $1,995/oz. The SPDR Gold Trust GLD was 0.4% lower to $185.54. Silver rose 0.4% to $25.28, with the iShares Silver Trust SLV trading 0.4% higher to $23.25 per share. Bitcoin fell 3.5% to $29,301.

Staff writer Piero Cingari updated this report midday Wednesday.  

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