Stocks Hold Steady, US Mulls China Chip Restrictions, Powell Sounds Hawkish: What's Driving Markets Wednesday

Stocks were mixed on Wednesday, with technology holding up better than the premarket predicted, despite a Wall Street Journal report that the U.S. government is considering semiconductor export limits to China.

Fed Chair Jerome Powell stated at the ECB Forum on Central Banking that additional interest rate hikes – at least two – are on the way this year, without ruling out hiking at consecutive meetings. Furthermore, the Fed chair said the U.S. economy is highly resilient, and that a recession, while possible, is not the most likely scenario.

The Fed is due to release the results of its annual stress tests for banks at 4:30 p.m. EDT Wednesday.

Highlights from Wednesday’s Trading:

The S&P 500 was slightly up (0.1%) as of midday trading, while the Dow slipped 0.2%.

The tech-heavy Nasdaq 100 posted a 0.6% uptick, while small caps in the Russell 2000 gained 0.3%

U.S. Indices’ Performance on Tuesday

Index	Performance (+/-)	Value
Nasdaq 100	+0.55%	15,020.54
S&P 500 Index	+0.06%	4380.98
Dow Industrials	-0.23%	33,849.65
Russell 2000	+0.27%	1,855.65

Analyst Color:

An analyst is optimistic about the near-term market outlook, as he fell back on history to highlight the positivity. When the S&P 500 is up more than 10% for the year-to-date period at the end of June, the performance during the next six months is much better than the average, said Carson Group analyst Ryan Detrick.

“But If the year before was negative [like now], things are even better,” he said, adding that the median gain for the next six months was 12.4% and the index was higher 89% of the time.

"We remain OW equities and would buy weakness," Detrick said.

When the S&P 500 is >10% YTD at the end of June the next 6 months do well, much better than avg.

But if the year before was negative (like now) things are even better.

Next 6 mo up median of 12.4% and higher 89% of time.

We remain OW equities and would buy weakness. pic.twitter.com/IhG4HIaWNL

— Ryan Detrick, CMT (@RyanDetrick) June 27, 2023

Wednesday’s Trading In Major US Equity ETFs

In midday trading on Wednesday, the SPDR S&P 500 ETF Trust SPY was 0.1% higher to $436.60, the SPDR Dow Jones Industrial Average ETF DIA fell 0.3% to $338.4 and the Invesco QQQ Trust QQQ was 0.4% higher to $365.35, according to Benzinga Pro data.

Performances among sectors were mixed for the session, with the Consumer Discretionary Select Sector SPDR Fund XLY and the Energy Select Sector SPDR Fund XLK both rising 0.7%.

The Utilities Select Sector SPDR Fund XLU and the Materials Select Sector SPDR Fund XLB were the laggards, down 1.3% and 0.8%, respectively.

Latest Economic Data:

Mortgage applications in the US rose 3% in the week ended June 23, a third consecutive week of increases, data from the Mortgage Bankers Association data showed.

U.S. crude oil stocks tumbled by 9.603 million barrels in the week ending June 23, substantially more than market expectations of a 1.757-million draw, data from the EIA Petroleum Status Report showed.

The Fed is due to release the results of its bank stress results at 4:30 a.m. EDT. Despite the challenging nature of the tests, analysts and executives anticipate the 23 banks being tested will show capital levels above regulatory requirements, reports say.

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Stocks In Focus:

• Nvidia Corp. NVDA almost fully cut premarket almost losses, while Advanced Micro Devices, Inc. AMD rose 0.6% despite reports of the China chip ban by the Commerce Department.
• Carnival Corp. CCL rose 9.3%, after rising 8% yesterday, extending the uptrend on bullish analyst calls. CCL’s peer Norwegian Cruise Line Holdings Ltd. NCLH also rose 8.5%.
• Netflix Inc. NFLX gained 4% after Oppenheimer raised its price target on the stock.
• General Mills, Inc. GIS fell 4% after reporting weaker-than-expected revenues.
• Roivant Sciences Ltd. ROIVW jumped 7.5% on better-than-expected financial results.
• The major names due to report after the close include BlackBerry Ltd. BB, Worthington Industries Limited WOR, H.B. Fuller Company FUL and Micron Technology, Inc. MU.

Commodities, Bonds, Other Global Equity Markets:

Crude oil rose 1.6%, with a barrel of WTI-grade crude trading at $69.20. The United States Oil Fund ETF USO was 1.9% higher to $62.40.

Treasury yields fell, with the 10-year yield down by 4 basis points to 3.73% and the two-year yield also down by 4 basis points to 4.72%. The iShares 20+ Year Treasury Bond ETF TLT was 0.3% higher for the day. 

The dollar gained, with the U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF UUP, up 0.5%. The EUR/USD pair, which is tracked by the Invesco CurrecyShares Euro Currency Trust FXE, was 0.5% lower to 1.0910.

European equity indexes closed in the green. The SPDR DJ Euro STOXX 50 Etf  FEZ rose 0.2%. 

Gold fell 0.2% to $1,910/oz. The SPDR Gold Trust GLD was 0.2% lower to $177. Silver eased 0.2% to $22.8, with the iShares Silver Trust SLV down 0.3% to $20.90. Bitcoin BTC/USD was 1% lower to $30,400.

Staff writer Piero Cingari updated this report midday Wednesday. 

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