Stocks managed to eke out gains on light volume Wednesday as traders remained cautious ahead of Federal Reserve Chairman Jerome Powell's highly anticipated speech later this week.
The Fed chief will speak at the central bank's annual policy symposium in Jackson Hole, Wyo., on Friday morning. And until he does, stocks will likely continue to struggle for direction.
Indeed, fears of a hawkish Fed have sapped traders' enthusiasm for risk over the past several sessions. Mixed-to-downbeat economic reports have likewise done the recent rally no favors. Most recently, on Wednesday, we learned that U.S. pending home sales fell in July to their lowest level since the start of the pandemic. Paul Gray, CEO of Ironhold Capital, says the data marks a "recession in the housing market."
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
"As interest rates and inflation rise simultaneously, many households choose to save money rather than purchase a house due to high borrowing costs and elevated prices brought by inflation," Gray notes.
Traders and investors are naturally finding it difficult to embrace equities when the Fed is hiking rates amid reports of recessionary activity.
Wednesday was not without drama in select stocks, however. Peloton Interactive (PTON (opens in new tab), +20.4%) jumped after it struck a deal to sell bikes and some accessories on Amazon.com. And Bed Bath & Beyond (BBBY (opens in new tab), +18%) got a lift after the home goods retailer said it selected a lender to boost its liquidity. After-market trading could also get interesting, with earnings reports due from high-profile growth stocks (opens in new tab) Nvidia (NVDA (opens in new tab), $172.22), Snowflake (SNOW (opens in new tab), $159.80) and Dow component Salesforce (CRM (opens in new tab), $180.62).
The blue-chip Dow Jones Industrial Average added 0.2% to close at 32,969, while the broader S&P 500 rose 0.3% to 4,140. The tech-heavy Nasdaq Composite ticked up 0.4% to finish at 12,431.
Other news in the stock market today:
- The small-cap Russell 2000 added 0.8% to 1,935.
- U.S. crude futures rose 1.6% to $95.26 per barrel.
- Gold futures gained 0.2% to $1,765.20 an ounce.
- Bitcoin increased 0.8% to $21,670 (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.)
Don't Fight the Fed
It's a Wall Street cliche, but it happens to be true: Don't fight the Fed. With rates headed higher, investors would do well to go with the flow.
For example, rising rates should continue to support a strong dollar. So be sure to check out stocks that win (and stocks that lose) from a rising greenback (opens in new tab). Rate-tightening cycles also increase the odds of the economy entering a recession (opens in new tab). That's a recipe for increased volatility – and it affords an opportunity for the best low-volatility stocks (opens in new tab) to shine.
It's also the case that rate hikes are a blunt tool to fight inflation. Although the rate of inflation has cooled off recently, higher prices aren't going away anytime soon. Shares in companies with pricing power (opens in new tab) can actually deliver sustained outperformance during inflationary periods. With that in mind, have a look at the best stocks to buy to beat inflation (opens in new tab).
-
-
Gaining More Certainty in Your Retirement Income Plan
Relying on market performance to close the gap in your retirement income could let you down, but a CD ladder and fixed annuities could provide some certainty.
-
Considering a 1031 Exchange? The Rules You Need to Know
Taxes are an inevitable part of investing in real estate. You can, however, defer or avoid paying capital gains taxes by following some simple rules of a 1031 exchange. Yes, you read that correctly!
-
Stock Market Today: Stocks End the Week on a High Note
Intel stock plunged after a big earnings miss, but encouraging inflation and consumer sentiment data created tailwinds for the broad market.
-
Kiplinger's Weekly Earnings Calendar (Jan. 30-Feb. 1)
stocks Check out our earnings calendar for the upcoming week, as well as our previews of the more noteworthy reports.
-
Stock Market Today: Stocks Climb After Tesla Earnings, GDP
The electric vehicle maker reported record profit and revenue for the fourth quarter.
-
Stock Market Today: Microsoft Earnings Weigh on Stocks
While Microsoft reported top- and bottom-line beats in its fiscal Q2, shares declined on disappointing guidance.
-
The S&P 500 Dividend Aristocrats Are Getting 3 New Members
Dividend Aristocrats The index of stocks that have upped their dividends for at least 25 straight years is about to get bigger.
-
Stock Market Today: Dow Gains After Busy Day of Blue-Chip Earnings
Travelers and 3M were two Dow components that reported earnings today.
-
Stock Market Today: Stocks Climb After Spotify Job Cuts
Spotify became the latest company to announce layoffs, while Salesforce climbed on activist investor news.
-
Stock Market Today: Netflix, Alphabet Lead Rally in Tech Stocks
Netflix reported much higher-than-expected subscriber growth, while Wall Street cheered Alphabet's layoff announcement.
