Stock market today: Stocks rebound as Powell sticks to script on rate cuts

Karen Friar and Josh Schafer
Updated
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US stocks popped on Wednesday, with techs vaulting back from a steep sell-off as investors digested Federal Reserve Chair Jerome Powell's stance that interest rate cuts are still likely this year.

The tech-heavy Nasdaq Composite (^IXIC) jumped nearly 0.6% after techs led a sharp slide in stocks more broadly on Tuesday. The S&P 500 (^GSPC) also added 0.5%, while the Dow Jones Industrial Average (^DJI) popped 0.2%, as both indexes came off losses of more than 1%.

Powell's testimony to Congress later may provide a catalyst for stocks, which have logged two days of losses as a battering for "Magnificent Seven" stalwarts Apple (AAPL) and Tesla (TSLA) fueled bubble fears.

Investors will listen closely for any deviation by Powell from Fed policymakers' much-repeated message that there's no rush to cut interest rates. Powell told lawmakers that rate cuts are likely to be warranted "at some point" in 2024. Investors will look for more clarity on this issue as Powell fields questions from lawmakers over the next two days.

"If the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year," Powell said to the House Financial Services Committee.

In individual stocks, New York Community Bank (NYCB) stock whipsawed to close up more than 7%. The stock initially tanked following a report that NYCB was on the hunt for investors willing to buy stock in the company. But shares rebounded after the bank announced a new CEO and a $1 billion infusion from a group that includes former Treasury Secretary Steven Mnuchin.

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  • Josh Schafer

    Stocks rebound after tough Tuesday

    Stocks popped on Wednesday, with techs vaulting back from a steep sell-off as investors digested Federal Reserve Chair Jerome Powell's stance that interest rate cuts are still likely this year.

    The tech-heavy Nasdaq Composite (^IXIC) jumped nearly 0.6% after techs led a sharp slide in stocks more broadly on Tuesday. The S&P 500 (^GSPC) also added 0.5%, while the Dow Jones Industrial Average (^DJI) popped 0.2% as both indexes came off losses of more than 1%.

    Wednesday, however, didn't bring a widespread rebound for Big Tech. Apple (AAPL) and Tesla (TSLA) both closed in the red. Apple has now fallen for six straight days.

  • Josh Schafer

    Steven Mnuchin leads $1 billion attempt to rescue NYCB

    New York Community Bank (NYCB) shares rebounded Wednesday afternoon as the bank announced a new CEO and a $1 billion infusion from a group that includes former Treasury Secretary Steven Mnuchin.

    Yahoo Finance's David Hollerith reports:

    The moves on Wednesday came after the stock of the $114 billion lender fell as much as 45% following a report by the Wall Street Journal that NYCB had dispatched bankers to find investors willing to buy stock in the company.

    After the $1 billion deal was announced, the stock rebounded as much as 18%.

    The firms that lined up to provide the infusion include Liberty Strategic Capital, a firm founded by Mnuchin in 2021, as well as Hudson Bay Capital, Reverence Capital Partners, and Citadel Securities.

    As part of the deal, former Comptroller of the Currency Joseph Otting will become NYCB's new CEO.

    The transaction is scheduled to close by March 11 and is still subject to regulatory approvals.

    "In evaluating this investment, we were mindful of the bank's credit risk profile," Mnuchin said in a press release. His firm is expected to contribute $450 million, more than the other investors.

    "With the over $1 billion of capital invested in the bank, we believe we now have sufficient capital should reserves need to be increased in the future to be consistent with or above the coverage ratio of NYCB's large bank peers."

  • Alexandra Canal

    Paramount CFO: 'We do anticipate future price increases'

    Subscribers should expect even more price hikes to Paramount+ following a surge of increases across a variety of streaming platforms last year, Paramount CFO Naveen Chopra said on Wednesday.

    "When we look at the business going forward, we do anticipate future price increases," Chopra said at Morgan Stanley's media and telecom conference.

    The comments come as media companies face pressure from shareholders to scale their streaming services and make them profitable. Last week, Paramount reported streaming losses narrowed to $490 million in the fourth quarter, ahead of analyst estimates. The company expects Paramount+ to reach profitability in 2025.

    The company last hiked prices for its streaming service last year. Chopra said there are no current price increases planned for 2024.

    In June, Paramount launched its ad-free Paramount+ with Showtime streaming offering for $11.99 a month — $2 more than the previous price for a Paramount+ subscription. It also raised the prices of its ad-supported tier by $1 to $5.99.

    "It really wasn't until Q4 that the price increases we did [were] rolled out across the entire subscriber base," Chopra explained. "So yes, we do see upside in pricing in terms of what we've learned from the price increase that we did last year."

    Price increases have become a go-to trend in the streaming industry with virtually all media companies (with the exception of Netflix) hiking prices in 2023.

    Added up, the cost of these services now rival the dreaded cable TV bundle of years past — the very thing that streaming set out to undo.

    Consumers are taking notice with subscribers canceling more of their plans to combat rising costs.

    According to the latest data from subscription analytics platform Antenna, subscribers to premium subscription services grew at their slowest pace since before the pandemic began, rising just 10.1% last year compared to the 21.6% seen in 2022.

    On top of slowing growth, churn has nearly tripled since 2019, with 140.5 million cancellations in 2023, the largest drop in subscribers over the last five years.

    Read more here.

  • Josh Schafer

    Day 1 of Powell's testimony brings 'no change' to Fed narrative

    Federal Reserve Chair Jerome Powell spoke in front of the House Financial Services Committee for three hours on Wednesday as part of his semiannual testimony to lawmakers.

    Powell said rate cuts are likely to be warranted "at some point" in 2024. He largely reiterated the consistent message from Fed officials in recent weeks that more confidence is needed in inflation's decline before cutting interest rates.

    "If the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year," Powell said to the House Financial Services Committee.

    JPMorgan chief US economist Michael Feroli remarked in a note to clients that Powell's comments on Wednesday had "no big surprises."

    Feroli added: "Overall Powell was pretty careful to avoid sending new signals on the direction of monetary policy, which makes sense given that there’s another full set of inflation and employment data ahead of the next FOMC meeting."

    Nationwide senior economist Oren Klachkin agreed, noting that Wednesday's testimony didn't "offer much new in the way of forward guidance."

    "His remarks signal that rate cuts are in the pipeline, but the federal funds rate will stay unchanged until policymakers have greater confidence they’ll achieve their two percent inflation goal," Klachkin wrote in a note to clients.

    Klachkin maintains a base case for the first Fed interest rate cut to come in June. Market consensus agrees, with investors placing a 72% chance the Fed cuts rates at the June meeting, per the CME FedWatch Tool.

    Powell will testify in front of the Senate on Thursday.

  • Josh Schafer

    New York Community Bank plunges amid report of attempted capital raise

    New York Community Bank (NYCB) has tumbled again on Wednesday and been halted at times throughout the trading session.

    Yahoo Finance's David Hollerith reports:

    The stock of New York Community Bank plunged following a report that it is seeking to raise capital, highlighting the many challenges facing the commercial real estate lender as it struggles to regain investor confidence.

    The price of its stock fell as much as 45% after the Wall Street Journal reported that NYCB had dispatched bankers to find investors willing to buy stock in the company. It is now down more than 80% since January.

    NYCB's stock first began falling on Jan. 31 when it surprised analysts by slashing its dividend and setting aside more for loan losses.

    The turmoil intensified again last week after it disclosed the exit of CEO Thomas Cangemi, weaknesses in its internal controls, and a tenfold increase in its fourth quarter loss to $2.7 billion.

    The Hicksville, N.Y.-based lender now has three options, according to Chris Marinac, an analyst for Janney who covers the bank.

    It can sell assets, raise capital, or share the risk of some assets with outside investors via a financial instrument known as a credit risk transfer.

  • Josh Schafer

    All 11 sectors are in the green

    After a down day on Tuesday, tech is leading Wednesday's rebound.

    The Information Technology (XLK) sector is up more than 1.3% on the day leading the sector action. Notably, all 11 sectors are in the green with Utilities (XLU) also up more than 1%.

    Source: Yahoo Finance
    Source: Yahoo Finance
  • Josh Schafer

    Trending tickers on Wednesday

    Palantir (PLTR) stock led the Yahoo Finance trending tickers page on Wednesday as shares popped nearly 9%. The company announced on Wednesday it won a new $178 million US Army contract for a battlefield system using artificial intelligence.

    JD.com (JD) shares rose more than 16% after the company's latest quarterly report. The company topped Wall Street's quarterly revenue estimates and announced plans for a $3 billion stock buyback program.

    CrowdStrike (CRWD) stock rose about 12%, paring gains from a move of over 20% after hours on Tuesday night. The cybersecurity company's earnings per share of $0.95 reflected 102% growth compared to the same period a year prior and topped Wall Street's estimates for $0.82.

    Foot Locker (FL) shares sank nearly 30%. The company announced in its fourth quarter earnings call that the timeline for achieving its 8.5% to 9% operating margin target has been pushed back two years to 2028.

  • Brian Sozzi

    Nordstrom takes a pounding

    Nordstrom (JWN) has been taking a beating all morning long, down 15% after another ugly quarter.

    Most analysts on the Street have remained cautious after the results — deservedly so.

    Sales at the core Nordstrom brand were weak again. Rack sales were up double digits. Margins under pressure. Conference call commentary wasn't inspiring.

    JP Morgan analyst Matt Boss perfectly sums up the vibe on the stock:

    "We are Underweight JWN. With the current backdrop potentially “as good as it gets” for both JWN’s $100K+ core household income customer (w/ MSD-HSD% personal savings rate, debt service ratio at 40-year lows, and US household wealth creation of +$12 trillion in 2020) and on the pricing/promotional front (lean channel inventory/ industry AUR expansion) – JWN’s absolute and relative performance remain underwhelming with 2023 revenue levels below 2019 with EBIT margins below 2019."

  • Josh Schafer

    Wage growth for job switchers increases for first time since November 2022

    On Wednesday, ADP Research Institute's monthly pay insights report showed wage gains for people that change jobs increased in February for the first time since November 2022.

    ADP chief economist Nela Richardson told Yahoo Finance this is noteworthy because wage gains for job changers are “most sensitive to current labor market activity.” Richardson added that the number shows the massive wage growth seen during the pandemic is “not going to bed quietly.”

    “[Wages] are actually showing that tightness in terms of the labor market is still very prevalent," Richardson said.

    There were, however, other signs on Wednesday that could indicate slowing wage growth is on the horizon, which many believe would be a welcome sign for the fight against inflation. SoFi's head of investment strategy Liz Young noted on X that quits tend to lead wage growth by about nine months. So the decrease in the quits rate seen in January's JOLTs report is pointing to "further wage deceleration" in the pipeline.

    Another update on wages will come with the February jobs report, which is slated for release at 8:30 a.m. ET on Friday. Economists surveyed by Bloomberg expect wages grew at 4.3% during February down from 4.5% in January.

  • Josh Schafer

    Job openings hit lowest level since March 2021

    Job openings hit their lowest level since March 2021 in January, showing further signs of rebalancing in the labor market.

    There were 8.86 million jobs open at the end of January, a slight decrease from the 8.89 million job openings in December, according to new data from the Bureau of Labor Statistics released Wednesday. Economists surveyed by Bloomberg had expected there were 8.85 million openings in January.

    The report also showed that the quits rate, which reflects confidence among workers, slipped to 2.1%. That's down from 2.2% in the previous month and is its lowest level since August 2020. Additionally, the JOLTS report showed that 5.7 million hires were made in the month, a slight decrease from the 5.8 million seen in December.

    The hiring rate sat at 3.6% in January.

  • Josh Schafer

    Stocks pop at the open

    US stocks opened higher on Wednesday, with techs vaulting back from a steep sell-off as investors digested Federal Reserve Chair Jerome Powell's stance that interest rate cuts are still likely this year.

    The Nasdaq Composite (^IXIC) jumped about 1% after techs led a sharp slide in stocks more broadly on Tuesday. The S&P 500 (^GSPC) added more than 0.6%, while the Dow Jones Industrial Average (^DJI) popped 0.5%, as both indexes came off losses of more than 1%.

    Prepared testimony published Wednesday morning revealed that Powell plans to tell lawmakers that rate cuts are likely to be warranted "at some point" in 2024. Investors will look for more clarity on this issue as Powell fields questions from lawmakers over the next two days.

    "If the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year," Powell will testify to the House Financial Services Committee.

  • Brian Sozzi

    Bring on Jerome Powell

    Just to level set with you in case you haven't gotten there already:

    The year may end with no interest rate cuts as opposed to the six some on the Street expected in early January. It is interesting to see markets still rocking as expectations on rates have come in. Good to see investors embrace good economic data!

    It's likely you will hear the Fed's Jerome Powell continue the drumbeat of recent Fedspeak on rates in his testimony to lawmakers today.

    For Goldman Sachs economists, 2024 is now shaping up to be the year of rate cuts ... everywhere else.

    "The major DM [developed market] central banks will cut for at least three consecutive meetings starting in June, continue to cut consecutively in economies like the Euro Area and UK where growth remains below trend, but slow down in economies like the US where activity remains resilient," said Goldman's chief economist Jan Hatzius.

    And that raises the question: is it time to rotate into European stocks from more expensive US equities?

    Goldman sees a faster pace of rate cuts in markets outside the US.
    Goldman sees a faster pace of rate cuts in markets outside the US. (Goldman Sachs)

     

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