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Stock Market Today: Stocks Wobble Ahead of Next Fed Rate Decision

Another hot inflation reading kept the bulls nailed to the ground on Tuesday. All eyes are now on tomorrow’s conclusion of the latest Federal Reserve policy meeting, where the US central bank is expected to raise its benchmark interest rate yet again.

The Bureau of Labor Statistics reported this morning that US producer prices soared 10.8% year-over-year (and 0.8% month-over-month) in May, driven in large part by high farm prices. Energy. That was higher month-on-month than April’s revised 0.4%, and roughly around economists’ expectations.

“This report adds to evidence that price pressures remain elevated across the board, suggesting higher inflation in the near term,” says Barclays economist Pooja Sriram.

In other words, there is nothing to suggest that the Federal Reserve will back down from its projection that it will raise the fed funds rate by another 50 basis points on Wednesday. In fact, Wall Street is increasingly betting that it will go further.

“The Fed is suggesting that it is willing to induce a recession to prevent rising inflation,” says Gene Goldman, chief investment officer at Cetera Investment Management. “The CPI and PPI reports will cause the Fed to raise rates more than the markets had anticipated last week [75 basis points instead of 50]. This is analogous to the Fed taking off the Band-Aid and raising rates quickly up front (instead of slowly).”

Goldman adds, however, that the most important thing to watch is the terminal rate: while the Fed could become more aggressive now, it could also end up raising rates less later in the rate hike cycle.

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the S&P 500 dug a bit deeper into bear market territory, falling 0.4% to 3,735, while the Dow Jones Industrial Average it was down 0.5% to 30,364. the Nasdaq Composite actually managed to finish in positive territory, with a modest 0.2% gain at 10,828.

Oracle (ORCL, +10.4%) was one of the brightest spots of the trading session, as the enterprise software company easily beat quarterly earnings estimates and delivered better-than-expected guidance for its upcoming fiscal year.

stock chart for 061422

Other news in the stock market today:

  • the small cap Russell 2000 it fell 0.4% to 1,707.
  • united states crude oil futures it lost nearly 1.7% to settle at $118.93 an ounce.
  • gold futures it fell 1% to close at $1,813.50 an ounce.
  • bitcoins the slide continued, with the cryptocurrency falling 4.3% to $22,156.03. (Bitcoin operates 24 hours a day; prices reported here are as of 4 pm)
  • The recent cryptocurrency sell-off forced CoinbaseGlobal (COIN, -0.8%), and the company announced today that it will reduce its global workforce by 18%. “It looks like we are entering a recession after an economic boom of more than 10 years. A recession could lead to another crypto winter and could last for an extended period,” Coinbase CEO and co-founder Brian Armstrong wrote in a blog post. . . “As we operate in this highly uncertain period in the world, we want to ensure that we can successfully navigate a prolonged downturn. Our team has grown very rapidly (>4x in the last 18 months) and our employee costs are too high to manage.” effectively in this uncertain market. The actions we are taking today will allow us to more confidently manage this period, even if it is severely prolonged.”
  • FedEx (FDX) shares rose 14.4% after the delivery giant said it will increase its quarterly dividend by 53% to $1.15 per share. FDX also said it will add three new board members, two immediately and one in the future, as part of a deal with activist investor DE Shaw. “FDX bear cases are largely tied to 1) resistance to structural change and 2) macro risks in companies with high operating leverage,” says Bascome Majors, an analyst at Susquehanna Financial Group, which is rated Neutral. (Hold) for action. “Today’s announcement of a board update and other governance updates tied to a cooperative agreement with activist investor DE Shaw is a significant change to the ‘won’t change’ narrative, though admittedly it can’t help that their cyclical businesses outperform the macro.

Top Bull Market Players 2020-22

“It’s better to miss the bottom of a market and buy as it goes higher than to guess where exactly the bottom is.”

So says George Ball, chairman of the investment firm Sanders Morris Harris, adding that “new money must be patient money” now that investment psychology has shifted decidedly to the downside.

We recently discussed our picks, both stocks and exchange-traded funds (ETFs), for investors buying in a bear market.

Sanders also chimes in, saying “there are opportunities right now in low-volatility, high-dividend-yield stocks that shouldn’t fall much further regardless of the path of the broad indices,” adding that “master limited partnerships (MLPs) These are the types of securities that offer stability in times of market pressure.”

But today, we also want to remember yesterday’s official end of the bull market of more than two years. While the COVID recovery race was best known for high-flying work-from-home names, surprisingly, those weren’t the stocks that finished on top at the end of the bull market. Read on as we take a brief look at the top players between the depths of the COVID pandemic and the bull’s last gasp in 2022.

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