Stocks deteriorated into mixed trade shortly after Wednesday's open, as the market took a breather after Tuesday's strong gains and investors remained cautious ahead of the Federal Reserve's rate policy announcement this afternoon.
XThe Nasdaq shed its opening gain and slipped 0.1%. The Dow Jones Industrial Average defended its 0.2% advance. The S&P 500 fought to hold a fractional gain, as Facebook (FB) traded down more than 1% to the bottom of the index. House Financial Services Chairwoman Maxine Waters called on Facebook executives to testify before Congress regarding the introduction of its cryptocurrency, Libra.
Earnings news kicked Adobe (ADBE) and Jabil (JBL) higher. Steel stocks rose Wednesday, after U.S. Steel (X) reported an earnings miss, but said it would idle two blast furnaces due to weak demand. U.S. Steel gained 4%, while Nucor (NUE) and Steel Dynamics (STLD) climbed 2% apiece.
La-Z-Boy (LZB) and Winnebago (WGO) fell sharply following their earnings reports. Boeing (BA) topped the Dow Jones Industrial Average on news about new orders for its 737 Max jets. Adobe rose highest among Nasdaq 100 and & S&P 500 stocks.
Among IPO stocks, Iqvia Holdings (IQV) broke out of a flat base with a 4% gain. MongoDB (MDB) and CrowdStrike Holdings (CRWD) jumped more than 2% each. Chewy (CHWY), Beyond Meat (BYND) and Fiverr International (FVRR) all fell in early trade.
Markets will be keenly tuned to the Federal Reserve's rate policy announcement, set for 2 p.m. ET. A press conference with Federal Reserve Chairman Jerome Powell will follow. Market expectations are tuned for some sort of rate cut signals before the end of the year. Markets are likely to react to whether the Fed does, or does not, appease those expectations.
Dow Jones Stock Boeing Rises On 737 News
Boeing pared its early gain to 0.3% Wednesday, rising on news that it had received a letter of intent for 200 of its 737 Max aircraft. Rival Airbus (EADSY) and Boeing are amid their annual order wrestling match at the Paris Air Show. Airbus holds an edge this year as Boeing deals with tragic failures that contributed to 737 crashes in Ethiopia and Indonesia.
Tuesday's letter of intent, from Aer Lingus and British Airways parent International Airlines Group, marked Boeing's first order for the 737s since those crashes. Boeing stock gained 7.8% for the week through Tuesday, attempting to start up the right side of a three-month consolidation.
Facebook's Libra Faces Scrutiny
Facebook shares slumped 1.6% Wednesday, after reversing lower Tuesday as Congress took a closer look at its new cryptocurrency, Libra. House Financial Services Chairwoman Maxine Waters called on Facebook executives to testify before the committee, and urged executives to hold off on developing the new Libra currency.
"Given the company's troubled past, I am requesting that Facebook agree to a moratorium on any movement forward on developing a cryptocurrency until Congress and regulators have the opportunity to examine these issues and take action," a statement released by the California Democrat said.
Facebook stock surged almost 3% early Tuesday, as markets reacted to the launch of the Libra cryptocurrency. But shares quickly reversed, ending the day with a 0.3% decline. The stock is below a 198.58 buy point in an 11-month cup-with-handle base.
Stock Market Rally Busts June Gloom
The stock market rally received a strong vote of confidence Tuesday, as the Nasdaq retook support with a decisive move, while the Dow Jones Industrial Average and the S&P 500 gained some cushion above their 50-day lines. Holding onto support will be the issue for the Nasdaq. If it can do that, and build on Tuesday's powerful move, the index's next step will be to retake its record peak, set April 29. The Nasdaq ended 2.8% off that high on Tuesday. The S&P 500 is 1.3% below its peak, set on May 1.
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The Dow Jones Industrial Average is in a slightly different situation. While the Nasdaq and S&P 500 moved to new highs in April and May, the Dow failed to reached its prior high from early October. The index ended Tuesday 1.8% below that level.
All three indexes continue to work on their strongest June performance in decades. The Nasdaq ended Tuesday with a 6.7% gain for the month. The S&P 500 is up 6%. The Dow Jones Industrial Average also has climbed 6.7% — its strongest June in more than 30 years.
For more detailed analysis of the current stock market rally, study the Big Picture.
Adobe Nears Buy Point; Iqvia Breaks Out
Adobe shares leapt 3% following its fiscal second-quarter earnings, reported late Tuesday. The cloud-based software provider reported earnings up 10% on a 25% surge in revenue. Both numbers topped analyst targets. Fiscal third-quarter earnings and revenue guidance were just below consensus views.
Adobe stock's early action Wednesday pointed to an open just below a flat base buy point at 291.80.
On the IPO front, Iqvia Holdings surged almost 4% in opening action. That launched the biotech stock past a 146.20 buy point in a second-stage flat base, according to IBD MarketSmith chart analysis.
Oil Prices Slip Ahead Of Data
Oil prices eased early Wednesday, after surging 3.8% on Tuesday. West Texas Intermediate traded 0.3% lower to $53.73 a barrel. Brent crude slipped 0.8% to $61.66 a barrel. The American Petroleum Institute late Tuesday reported an 813,000-barrel decline in crude oil inventories during the week ended June 13. The draw was smaller than projected, but ended a string of weekly increases. The Energy Information Administration reports its weekly supply data at 10:30 a.m. ET.
Hong Kong Rallies, Europe Lays Low
Stocks in Hong Kong soared, driving the benchmark Hang Seng Index up 2.6% and toward a third straight weekly advance. News of a meeting between the U.S. and Chinese presidents next week in Osaka soothed trade war fears, and the launch of the London-Shanghai Stock Connect boosted optimism for broadening Chinese markets. The Shanghai Composite gained 1%.
In Japan, stocks tracked the U.S. rally as Tokyo's Nikkei 225 pulsed 1.7% on Wednesday.
European markets turned cautious ahead of the U.S. Fed announcement. Frankfurt's DAX dipped 0.1%, Paris' CAC-40 traded 0.2% higher in afternoon action. London's FTSE 100 dipped 0.3%.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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