Stocks closed mixed Wednesday as investors weighed a fresh batch of earnings reports and a mid-afternoon Fed announcement.
Negative reactions to earnings from mega-cap blue chip stock Microsoft (MSFT) and chipmaker Texas Instruments (TXN) created headwinds for most of the session.
And while stocks failed to lift off after the Federal Reserve hiked interest rates to their highest level in 22 years, the Dow Jones Industrial Average managed to eke out its longest daily win streak in decades.
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.
Taking a quick look at today's earnings reports, Microsoft reported top- and bottom-line beats for its fiscal fourth quarter. However, in the company's earnings call, Chief Financial Officer Amy Hood warned that even with its leadership position in the nascent artificial intelligence (AI) industry, "growth from our AI services will be gradual as Azure AI scales and our copilots reach general availability dates." Additionally, the CFO said capital expenditures will "increase sequentially each quarter through the year" as the company scales to meet demand for its AI platform. MSFT stock fell 3.8%.
Elsewhere, Texas Instruments reported higher-than-expected earnings and revenue for its second quarter, but gave disappointing guidance for its current quarter. Additionally, the company said it will continue forward with plans to build out manufacturing capacity even if it results in short-term changes in gross margin. "Those are not irrelevant, of course," said Rafael Lizardi, chief financial officer of Texas Instruments, in the company's earnings call, "but it's just the focus is on supporting revenue growth in the short-term, midterm and long-term." The semiconductor stock slumped 5.4% today.
Happily, not all of the day's earnings reports were as poorly received. Google parent Alphabet (GOOGL) jumped 5.8% on second-quarter earnings and revenue beats, while Dow stock Boeing (BA) rose 8.7% after reporting a narrower-than-expected Q2 loss.
Fed resumes rate hikes
While the raft of earnings reports commanded the market's attention for much of Wednesday's session, the conclusion of the Federal Reserve's July monetary policy meeting was the marquee event. As expected, the Fed lifted its benchmark rate by 25 basis points (0.25%) to a target range of 5.25% to 5.5% – the highest level since early 2001. In its statement, the Fed said it will remain data dependent in determining if more rate hikes are needed to bring inflation down to its 2% target.
Along those lines, Federal Reserve Chair Jerome Powell said in his subsequent press conference that the central bank will proceed on a meeting-by-meeting basis to determine if future rate hikes are warranted. "Between now and the September meeting, we get two more jobs reports and two more Consumer Price Index (CPI) reports," and the outcome of those reports will drive the Fed's decision-making process, Powell said. But regardless of whether it hikes rates again, the central bank intends "to keep policy restrictive" until it's "confident inflation is coming down," the Fed chair added.
This led to a nail-biter of a finish on Wall Street. While the S&P 500 (-0.02% at 4,566) and the Nasdaq Composite (-0.1% at 14,127) closed modestly lower, the Dow eked out a 0.2% gain to 35,520. This marked the blue chip index's 13th straight advance and longest winning streak since 1987, according to Dow Jones Market Data.
XPEV pops, boosts other EV stocks
Lost in the shuffle of a jam-packed earnings calendar and highly anticipated Fed meeting was news that German automaker Volkswagen (VWAGY, -0.5%) will invest $700 million in Chinese electric vehicle (EV) maker Xpeng (XPEV). The strategic partnership will include the joint development of two VW brand mid-size electric vehicles in the Chinese market. The news was enough to send XPEV stock up nearly 27% and generate a halo effect on other Chinese stocks in the EV industry, including Nio (NIO, +10.6%) and Li Auto (LI, +3.6%).
We've mentioned before that the electric vehicle market is expected to grow by leaps and bounds over the next decade. As just one example, Fortune Business Insights projects a compound annual growth rate of 25.4% through 2028.
As such, investors seeking out the best growth stocks would be wise to keep an eye on the electric vehicle space. Here, we take a look at some of the best EV stocks to capitalize on the expanding industry.
Related Content
-
Dow Jones Adds 463 Points as Rate-Cut Odds Rise: Stock Market TodaySome futures traders are now pricing in the possibility of a jumbo rate cut in September, which lifted stocks today.
-
Bullish IPO: Should You Buy BLSH Stock?Wall Street is buzzing about the Bullish IPO. The Peter Thiel-backed crypto company went public on August 13, and BLSH stock nearly doubled in its market debut.
-
Nasdaq Ends the Week at a New High: Stock Market TodayThe S&P 500 came within a hair of a new high, while the Dow Jones Industrial Average still has yet to hit a fresh peak in 2025.
-
Stocks Swing Lower as Eli Lilly, Fortinet Spiral: Stock Market TodayThe main indexes finished well off their session highs after a disappointing batch of corporate earnings reports.
-
What Tariffs Mean for Your Sector ExposureNew, higher and changing tariffs will ripple through the economy and into share prices for many quarters to come.
-
Dow Dives 542 Points on Soft Jobs Data: Stock Market TodayThe last day of a busy week ends with the first greater-than-1% move in either direction in more than a month.
-
Stocks Can't Hold Meta, Microsoft Gains: Stock Market TodayThe main indexes all opened higher Thursday on impressive Big Tech earnings, but momentum faded into the close.
-
How to Invest for a Fall Interest Rate Cut by the FedA lot can happen between now and then, but the probability the Fed cuts interest rates in September is back above 80%.
-
Stocks Are Up and Down on Fed Day: Stock Market TodayIn another sign of changing times, JPMorgan has partnered with Coinbase to enable cryptocurrency purchases with credit cards.
-
Are Buffett and Berkshire About to Bail on Kraft Heinz Stock?Warren Buffett and Berkshire Hathaway own a lot of Kraft Heinz stock, so what happens when they decide to sell KHC?
