The Dow Jones Industrial Average fell as the latest Fed minutes revealed central bankers continue to contemplate further tightening. Amazon.com (AMZN) stock slid as founder Jeff Bezos moved to unload millions of shares. Nvidia (NVDA) fell ahead of earnings.
Fed Minutes Reveal These Concerns
Stocks have been rallying since the last Federal Reserve meeting, when Fed Chair Jerome Powell struck a cautious tone about the possibility of further interest rate hikes.
But the Fed minutes released today showed Fed members are still worried that inflation may persist or even move higher. This means they have yet to take future rate increases off the table despite Wall Street sentiment that central bankers are through with hikes.
“In discussing the policy outlook, participants continued to judge that it was critical that the stance of monetary policy be kept sufficiently restrictive to return inflation to the Committee’s 2-percent objective over time,” the minutes said.
Perhaps more importantly, they gave no indication about when bankers will look to start easing rates. The minutes also backed up Powell’s comments at the time that the FOMC is “not thinking about rate cuts right now at all.”
Treasury yields fell. The 10-year Treasury note slid 1 basis point to 4.41% while the 30-year also dipped 1 basis point to 4.56%. The five-year yield fell 2 basis points to 4.42% while the two-year dipped 2 basis points to 4.89%.
Meanwhile, the U.S. Dollar Index briefly undercut its 200-day moving average Tuesday. This could be a level to watch in coming sessions.
“The committee seems to be in a ‘wait and see’ mode, willing to be patient as more data helps clarify the inflation trajectory,” LPL Financial Chief Economist Jeffrey Roach said in a note to clients. “Markets should expect Powell and other committee members to remain hawkish in tone, but that does not necessarily imply the Fed will hike further. Markets expect the next move to be a rate cut by mid-2024.”
Nasdaq Tumbles As Small Caps Dive
The S&P 500 fell a more modest 0.2%. Jacobs Solutions (J) plunged 8.7% on mixed results and disappointing guidance. It knifed through the floor of a flat base.
The S&P 500 sectors closed mixed. Materials and health fared best on the stock market today. Real estate and technology were the worst-performing areas.
Small caps were mauled by the hungry bears, with the Russell 2000 diving 1.3%. Growth stocks were also bit, with the Innovator IBD 50 ETF (FFTY) sliding 0.8%.
Dow Jones Today: Intel, Microsoft Stock Lag
The Dow Jones industrials fared best out of the major indexes. A dip of more than 63 points, or 0.2%, was relatively modest.
It comes amid the fallout from the departure of Sam Altman from OpenAI. He is now in talks to rejoin the board of the artificial intelligence organization.
Chipmaker Intel (INTC) lagged the most on the Dow Jones today. It gave up 2.5% but remained extended for now.
Jeff Bezos Sells Amazon Stock
Amazon stock closed off lows but still gave up 1.5% Tuesday amid news of a big sale of stock by Bezos. The company’s former CEO sold nearly 1.7 million shares last week, a filing shows.
Although the filing was made Friday, CNBC reported today that Bezos is expected to be aggressive in selling more stock. He is reportedly looking at unloading 8 million to 10 million shares, which would be worth around $1 billion.
Bezos has been selling Amazon shares to pay for his philanthropic endeavors and to fund his privately held space company, Blue Origin.
His Big Tech billionaire rival Elon Musk, who leads Tesla (TSLA), is currently dominating the industry with SpaceX.
Nvidia Earnings Due, NVDA Falls
One of Amazon’s fellow Magnificent Seven stocks also fell as it got set to report earnings after the close.
NVDA stock was well off lows for the day but still closed lower, falling 0.9%.
Nvidia’s EPS came in at $4.02, while revenue came in at $18.12 billion. The stock was little changed after hours.
Nvidia stock trading at the top of its buy zone above a 476.09 entry, MarketSmith analysis shows. The AI leader is up nearly 250% so far in 2023, remarkable performance by anyone’s measure.
NVDA is a member of the prestigious IBD Leaderboard list of top stocks.
Outside Dow Jones: Stocks Near Entries
Investors should be keeping their eyes out for breakouts given the favorable market conditions.
Braze is trading in a buy zone after clearing a consolidation pattern with an ideal entry point of 50.13, MarketSmith analysis shows. The 5% buy zone here tops out at 52.64 and is a second-stage pattern, which still counts as an early stage.
Overall performance is strong, with its IBD Composite Rating coming in at 91 out of 99. Braze was the IBD 50 Stocks To Watch pick for Monday.
Market research firm Moody’s is in a buy zone after clearing a consolidation pattern entry of 363.19. An earlier entry at 350.46 has met with further gains. The relative strength line is looking powerful. MCO stock is in the top 11% of issues in terms of price performance over the past 12 months.
Golub Capital is in a buy zone after clearing a flat base entry of 15.10. This is a first stage pattern, which is a bonus.
GBDC stock was boosted after it turned in an earnings beat. Performance is strong all-around, with its EPS Rating of 87 out of 99 a standout.
Gen Digital tested a cup base entry of 21.15 and closed just below the entry. The security software play has a strong Composite Rating of 93.
Please follow Michael Larkin on X, formerly known as Twitter, at @IBD_MLarkin for more analysis of growth stocks.
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