The S&P 500 saw another session of volatility on Wednesday, as investors weighed the latest earnings reports and economic data. The index closed down 0.3% after swinging between gains and losses throughout the day.
The index opened lower by 0.8%, then rallied to a new intraday record high of 5,321.76, before plunging to a session low of 5,189.23, down 1.7% from the previous close. The index eventually recovered some of its losses and ended the day at 5,253.42, down 0.4%.
What caused this roller-coaster ride for the S&P 500?
The Federal Reserve’s monetary policy decision and press conference. The Fed announced that it would keep its benchmark interest rate unchanged at 0.25%, as widely expected, but signaled that it was ready to start reducing its massive balance sheet of $8.8 trillion in bonds and other assets as soon as March.
The Fed also raised its inflation and growth forecasts for 2024 and 2025, suggesting that it may hike rates faster than previously anticipated. The Fed’s hawkish stance surprised some investors who were hoping for a more dovish tone amid the recent surge in COVID-19 cases and the uncertainty over the debt ceiling and government funding.
The earnings reports from some of the biggest companies in the S&P 500. The fourth-quarter earnings season kicked off on Wednesday with mixed results from some of the most influential firms in the index.
Apple, Microsoft, Amazon, and Tesla all beat analysts’ expectations for revenue and earnings per share, but their shares fell after hours as investors focused on their guidance and margins. Apple warned that supply chain disruptions would continue to affect its sales and production in the first quarter of 2024.
Some of the key takeaways from the session
The energy sector was the best performer, rising 1.4% as oil prices rebounded from a sharp drop on Tuesday. Chevron, Exxon Mobil and ConocoPhillips were among the top gainers in the S&P 500, as crude oil futures climbed above $80 a barrel.
The technology sector was the worst performer, falling 1.2% as some of the high-growth names faced selling pressure. Netflix, Tesla and Shopify were among the biggest losers in the S&P 500, as investors rotated out of the stocks that have led the market rally this year.
The earnings season continued to deliver mixed results, with some companies beating expectations and others disappointing. Boeing, McDonald’s and General Dynamics were among the companies that reported better-than-expected earnings and revenue, while Microsoft, Starbucks and Visa were among the companies that missed estimates or issued weak guidance.
The economic data also showed a mixed picture of the recovery, with some indicators pointing to strength and others to weakness. The durable goods orders for September rose 0.5%, beating expectations of a 0.2% decline, while the new home sales for September fell 6.9%, missing expectations of a 1.5% increase. The consumer confidence index for October dropped to 113.8, below expectations of 115.0 and the lowest level since February.
The consumer confidence index for October fell to 113.8, below expectations of 115.0 and the lowest level since February. The consumer confidence index (CCI) is a survey that measures how optimistic or pessimistic consumers are about their financial situation and spending patterns.
It is based on five questions about current and future conditions, such as business, employment, and income. The CCI is a leading indicator of economic activity, showing how consumers respond to changes in the economy.
The CCI is a leading indicator of economic activity, showing how consumers respond to changes in the economy. The CCI is important because it reflects consumers’ willingness to spend money, which can drive economic growth.
Consumer spending accounts for about 60% of the U.S. GDP, so when consumers are confident, they are more likely to make major purchases, such as homes and automobiles. Conversely, when consumers are pessimistic, they tend to save more and consume less, which can lead to an economic slowdown or recession.
