Wednesday was a wait-and-see session for stocks as investors looked ahead to this afternoon's release of the minutes from the Federal Reserve's January meeting and Nvidia's (NVDA) after-the-close earnings report. The main market indexes were choppy as a result.
The Dow Jones Industrial Average (+0.1% at 38,612) and the S&P 500 (+0.1% at 4,981) spent most of the day in negative territory, though a late burst of buying power helped them close higher. The Nasdaq Composite wasn't as resilient, with the tech-heavy index falling 0.3% to 15,580.
Investors were tuned into the minutes from the January Fed meeting, where the central bank chose to leave the federal funds rate at a 23-year high of 5.25% to 5.5%. While this move was widely expected, stocks slumped after Federal Reserve Chair Jerome Powell pushed back on the idea of a March rate cut.
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The minutes showed Powell's colleagues agree that the central bank will not start lowering interest rates until it has "greater confidence" that inflation is nearing its 2% target.
"While the inflation data had indicated significant disinflation in the second half of last year, participants observed that they would be carefully assessing incoming data in judging whether inflation was moving down sustainably toward 2%," the minutes stated.
According to CME Group's FedWatch Tool, futures traders are currently pricing in a 54% chance for a quarter-point rate cut in June vs 30% odds of one happening in May.
Nvidia falls again ahead of earnings
In single-stock news, Nvidia continued to sell off ahead of tonight's earnings report, with shares spiraling 2.9%. So far this week, NVDA is down 7%, losing $127 billion in market value.
The Magnificent 7 stock is up 2% in the extended session after the chipmaker reported higher-than-expected fourth-quarter earnings.
Palo Alto suffers worst day ever on weak guidance
Palo Alto Networks (PANW) was another notable decliner, spiraling 28.4% after the cybersecurity firm reported earnings – its worst day ever. While PANW beat on both the top and bottom lines for its fiscal second quarter, it lowered its full-year billings and revenue outlooks. The company also forecast lower-than-expected fiscal third-quarter revenue.
In the company's earnings call, Palo Alto CEO Nikesh Arora said the guidance is not a result of a change in demand, rather "a consequence of us driving a shift in our strategy in wanting to accelerate both our platformization and consolidation and activating our AI leadership."
Still, CFRA Research analyst Janice Quek downgraded the tech stock to Hold from Buy. "Even as PANW remains well-positioned to maintain its leadership in the cybersecurity industry, we see the combination of its guidance and new sales strategy raising concerns over its execution and pace of its topline growth," Quek wrote in a note to clients.
Elsewhere, Amazon.com (AMZN) rose 0.9% following news it will replace Walgreens Boots Alliance (WBA, -2.5%) in the Dow Jones Industrial Average ahead of next Monday's open. Dan Burrows, senior investing writer at Kiplinger.com, explains why this matters here.
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