Stock Market Today: Volatility Picks Up After Powell Comments

Stocks struggled for direction Tuesday as investors took in comments from Federal Reserve Chair Jerome Powell. 

The major benchmarks initially shrugged off early weakness to trade higher after Powell took the mic at the Economic Club of Washington D.C. And though the buying power briefly faded as the head of the central bank indicated there was more work to be done to bring down inflation, stocks found their footing by the close. 

While Powell began his conversation with Carlyle Group co-founder David Rubenstein by saying that the disinflationary process has begun, he added that the Fed is ultimately data-dependent. "So if we continue to get, for example, strong labor-market reports [like in the January jobs report] or higher inflation reports, it may well be the case that we have to do more," Powell said.

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"Powell gave a similar message at last Wednesday's Federal Open Market Committee press conference: The disinflation process has begun," says Zhiwei Ren, portfolio manager at Penn Mutual Asset Management. "It is still early in the process, and the Fed wants to see lower inflation out of core service ex-housing sectors. Low inflation is likely to come with a higher unemployment rate." Overall, Ren says, the Fed chair's message was "fairly balanced."

Although Powell's comments sparked volatility in afternoon trading, the major benchmarks eventually stabilized to close higher on the day. The Dow Jones Industrial Average added 0.8% to 34,156, the S&P 500 gained 1.3% to 4,164, and the Nasdaq Composite rose 1.9% to 12,113.

Bed Bath & Beyond Gets Crushed

Fed Chair Powell's interview with David Rubenstein was the marquee event of the day, but there was plenty of single-stock news for investors to sift through as well. Most notably, Bed Bath & Beyond (BBBY) said that it will sell preferred stock and warrants in an effort to raise cash and avoid bankruptcy. The embattled homegoods retailer has reportedly secured commitments to raise more than $1 billion from the sale. 

"Unfortunately, we see a low probability that the company will be able to raise equity and view this as a 'last gasp' before filing for bankruptcy protection," says Wedbush analyst Seth Basham, who has an Underperform (Sell) rating on BBBY. Wall Street was also less than impressed with the news, sending the retail stock down 48.6% in today's trading. "In the event the transactions are successful, BBBY common shares could rise as they are trading like options on the company's survival, but the ultimate value would be undermined by this highly dilutive offering of preferred stock that would have priority over the common shares."