Dow Slips Ahead of Powell Remarks at Summit—and What Else Is Happening in the Stock Market Today

Overseas, the pan-European Stoxx 600 lost 1.3% and Hong Kong’s Hang Seng Index tumbled 1.9% as Asian bourses followed Wall Street’s downbeat performance in the last session.

A stock market rally last week, which saw the S&P 500 notch its best day since 2020, has lost steam. Stocks gave up gains on Tuesday to suffer their worst day in two weeks as investors soured on downbeat signals from the consumer confidence index.

“The S&P 500 was up 1.2% at the high of the day but closed down 2%. This was a clear rejection of the bear market rally. Futures are back to where they were before last Friday’s rally,” said Neil Wilson, an analyst at broker Markets.com.

Markets remain under pressure amid expectations that the Fed will move more aggressively to fight multidecade high inflation by hiking interest rates—a pathway of tighter monetary policy that risks spurring a recession. 

This narrative has been top of mind in recent months and will be in the spotlight again Wednesday as central bankers meet at a summit in Portugal. Fed chair Jerome Powell will deliver remarks alongside counterparts from the Bank of England and European Central Banks.

“As ever, markets will be dissecting [Powell’s] every word, looking for hints in this case, that the Fed is wavering on its hawkish bias as recessionary fears rise,” said Jeffrey Halley, an analyst at broker Oanda. “They are likely to be disappointed, but it should be good for some intraday [volatility].”

Ahead of Powell’s remarks, the president of the Cleveland Fed, Loretta J. Mester, told CNBC that the central bank was “just at the beginning” of hiking rates to control inflation. Acknowledging the risk of recession, Mester said she supported another mega-sized 75 basis-point rate hike in July if economic conditions remain unchanged. The typical interest-rate increase is 25 basis points.

Investors will also be eyeing a revision to first-quarter U.S. gross domestic product data Wednesday amid worries over the economic picture. The yield on the 10-year U.S. Treasury note was hovering around 3.17%, down from above 3.2% earlier this week.

As stocks continue to trade deep in the red this year, market participants are debating whether equities have found their bottom, or if recent gains are merely a bear-market rally preceding more pain.

“We do not believe the stock market has bottomed yet and we see further downside ahead,” said George Ball, the chair of investment group Sanders Morris Harris. “We see the S&P 500 bottoming at around 3,100, as the Federal Reserve’s aggressive, but necessary, inflation-fighting measures are likely to depress corporate earnings and push stocks lower.”

Here are four stocks on the move Wednesday:

NIO (ticker: NIO
) fell 7.5% in the U.S. premarket after short-seller Grizzly Research claimed that the Chinese electric-vehicle maker exaggerated revenue and profit margins; NIO denied the report.

2U (TWOU) jumped 14% in the premarket after a report that the educational technology company has received a buyout offer from India’s Byju for more than $1 billion.

AeroVironment (AVAV) dropped 11% in the premarket after the defense supplier’s fiscal 2023 forecast fell short of analysts’ estimates.

Just Eat Takeaway.com (JET.UK) tumbled 20% in London trading after analysts at Berenberg initiated coverage of Europe’s largest online food delivery group with a Sell rating, citing risks over the company’s ability to dispose of its U.S. Grubhub business.

Write to Jack Denton at [email protected]