Wall Street collapses in pre-market ahead of Fed interest rate decision

NEW YORK (AP) U.S. stocks drift Wednesday as Wall Street awaits news from the Federal Reserve on where interest rates could head.

The S&P 500 was down 0.3% in morning trading, after having its first losing month in the last six months. The Dow Jones Industrial Average was up 49 points, or 0.1%, as of 10:10 a.m. Eastern Time, and the Nasdaq Composite Index was down 0.3%.

CVS Health fell 19.1% after reporting results for the latest quarter that were weaker than analysts expected. He said he was injured by increase in costs to its advantage Medicare activity, and it revised downwards its profit forecasts for the whole year.

Other big names also trailed the market following their earnings reports, including Starbucks, Advanced Micro Devices and Super Micro Computer. But the focus is on Washington, DC, where the Federal Reserve will announce its latest interest rate decision this afternoon.

No one expects the Fed to change its main interest rate, which is at its highest level since 2001, in hopes of slowing the economy enough to bring inflation under control. But Fed Chairman Jerome Powell will give a news conference after the rate announcement, and he could give some guidance on the chances of a rate cut later this year.

He recently hinted rates could remain high for some time as Fed officials await confirmation that inflation is heading toward their 2% target. This was a disappointment for Wall Street, after the Fed had earlier indicated that it pencil drawing in three sections at prices in 2024.

Traders were even more optimistic after they began making forecasts for the year. six or more rate cuts. Today, many are betting on the possibility of having just one, or even none, according to data from the CME group. A series of reports on inflation this year arrived stubbornly higher than expected dashed hopes of multiple rate cuts.

Without the benefit of lower rates, which can boost the economy and investment prices, companies will have to generate better profits.

Starbucks fell 15.5% after falling short of earnings and revenue expectations in the most recent quarter. Sales trends have particularly weakened at its stores outside the United States and the group has lowered its profit and revenue forecasts for the full year.

Super Micro Computer, which has been one of Wall Street's hottest stars, fell 15.9% despite better-than-expected profits. The company, which sells servers and storage systems used in AI and other computing systems, missed analysts' revenue forecasts. Expectations had risen after its stock already tripled this year, amid a broader frenzy on Wall Street around artificial intelligence technology.

Advanced Micro Devices fell 7.4% despite profit matching expectations. Its revenue was slightly below forecast, as was the midpoint of its revenue guidance range for the current quarter.

They helped offset Amazon's 2.3% gain, which announced a higher profit for the last quarter than expected by analysts. The retail giant attributed the reacceleration of growth in its cloud computing business, in part, to it benefiting from demand for AI.

Chemical producer DuPont was also a winner, up 7.2%, after reporting a higher-than-expected profit. Customer demand in the semiconductor industry continues to recover.

In the bond market, Treasury yields eased slightly following weaker-than-expected economic reports.

A report from the Institute for Supply Management says the U.S. manufacturing sector unexpectedly fell back into contraction last month. Economists sought to maintain stability in one of the hardest-hit areas of the economy. Perhaps even more worrying is that manufacturers have also reported that prices are increasing at a faster rate.

Another report indicates that American employers announcing slightly fewer jobs end of March than expected by economists. The hope on Wall Street was that a slowdown in the number of openings could help keep the labor market in check, preventing it from heating up to the point of adding upward pressure on workers' wages. workers and on inflation in general. The downside is that if it weakens too much, a major support for the economy could collapse.

The 10-year Treasury yield fell to 4.64% from 4.68% Wednesday evening.

The two-year Treasury yield, which more closely tracks Fed expectations, rose to 5.00% from 5.04%. It remains close to its highest level since November.

In foreign stock markets, many exchanges were closed for the holidays. Tokyo's Nikkei 225 slipped 0.3% and London's FTSE 100 slipped 0.1%.

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AP writers Matt Ott and Zimon Zhong contributed.