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Stocks fall as Wall Street prepares for Fed rate decision

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Chart analyst Katie Stockton sees relief rally into the year end

Katie Stockton, founder and managing partner at Fairlead Strategies, believes the stock market could extend the relief rally for several weeks into the end of 2022.

“We’re looking for a retest of the 200-day moving average, but really adhering to that short-term momentum indicator to help us know if we need to start managing risk again,” Stockton said on CNBC’s “Squawk Box” Wednesday.

She said volatility is likely not going to pick up until the new year, and October has the potential to be a killer of this bear market.

— Yun Li

Chegg surges after earnings beat

Shares of education company Chegg soared 24% after a stronger-than-expected third quarter report.

Chegg’s adjusted earnings were 21 cents per share on $164.7 million of revenue. Analysts surveyed by Refinitiv were expecting 14 cents per share on $158.3 million of revenue.

The company’s adjusted gross margin rose to 73.0% from 61.2% a year ago, according to StreetAccount, and subscribers jumped 9% year over year.

Piper Sandler analyst Arvind Ramnani, who has a neutral rating on the stock, said in a note that the company is showing an ability to raise prices.

“The reaction to price increases for Chegg Study that was initiated back in mid-July (prices rose from $14.95 to $15.95 for monthly subscribers) has been favorable. Management notes that it has not seen a reduction in conversion for new customers, an immaterial number of non-renewals of the existing base and an increase in bundle additions.”

Boeing jumps after favorable comments about full-year positive free cash flow

Shares of Boeing jumped as much as 5.5% as Wall Street cheered comments made at the company’s investor day about full-year positive cash flow.

The company said that it expects to have free cash flow of $10 billion by 2025-2026, according to StreetAccount. After 2026, it expects to return cash to shareholders and will not need equity to get there. Boeing is forecasting that in will return to $100 billion in revenue with 10% margins in 2026, and that deliveries will have picked back up.

It’s also focusing on mitigating risk as its MAX aircraft returns to service, as well as liquidity and fixed price development programs.

—Carmen Reinicke

Tech stocks slide ahead of Fed rate hike

Tech stocks bared the brunt of Wednesday’s early losses, as traders prepared for another Federal Reserve rate hike and what that means for the growth-oriented sector.

The S&P 500’s information technology, consumer discretionary and communication services sectors tumbled nearly 1% each, while the tech-heavy Nasdaq Composite slid 1%.

Shares of Netflix and Meta Platforms were among the biggest tech laggards, falling more than 2% each. Salesforce’s stock tumbled 3.5%, while Apple, Amazon, Alphabet and Microsoft shares shed at least 1% each.

— Samantha Subin

MetLife, Corteva trading at all-time highs

Two stocks traded near all-time highs during Wednesday’s trading session.

That included MetLife, which rose to levels not seen since it went public in April 2000. Corteva was last trading at highs not seen since its spin-off from DowDuPont in May 2019.

Nine stocks also hit fresh lows, including shares of Paramount, which traded at lows not seen since May 2020.

Other stocks notching fresh lows included:

  • Alphabet C share trading at lows not seen since January 2021
  • Alphabet A share trading lows not seen since January 2021
  • Newell Brand trading at lows not seen since May 2020
  • Estee Lauder trading at lows not seen since July 2020
  • SVB Financial Group trading at lows not seen since September 2020
  • Baxter trading at lows not seen since April 2017
  • Zebra Technologies trading at lows not seen since May 2020
  • Essex Property Trust trading at lows not seen since November 2020

— Samantha Subin, Chris Hayes

Here’s how the market has done on Fed day during Powell’s tenure

Bespoke Investment Group compiled data on how well the market has done on Fed days during Chair Jerome Powell’s tenure. During that time, the S&P 500 has averaged a 0.29% gain on Fed days, “leaving him behind Bernanke but ahead of Yellen and Greenspan.”

Fed days have been volatile in 2022, with the S&P 500 posting moves of more than 1% in five of the last six.

— Fred Imbert

Decliners lead advancers 3-1 at NYSE

Market breadth was negative in early trading, with roughly three New York Stock Exchange-listed stocks declining for every advancer. Overall, 2,006 NYSE-listed names fell, while just 746 advanced.

— Fred Imbert

Energy leading stocks lower

The S&P 500 energy sector lagged in early trading Wednesday, falling about 1.7%, as traders braced for the Fed’s latest monetary policy decision. Real estate also fell more than 1%.

Overall, every S&P 500 sector traded lower on the day.

— Fred Imbert

A ‘data dependent’ Fed on future hikes could move markets higher, Cramer says

The market is already pricing in a 75 basis point hike from the Federal Reserve, but it could rally if Chair Jerome Powell indicates future increases will be based on economic data, CNBC’s Jim Cramer said Wednesday.

“Three-quarters and data dependent, I think we are home free, but three-quarters and more vigilant, then I think we have a sell-off,” Cramer said on “Squawk Box.”

While there hasn’t been data to support the theory that the economy is cooling off, Cramer hopes the central bank takes a wait-and-see approach.

“Tech has been bad, but non-tech has been good,” Cramer said. “I would hate to see non-tech join tech in the decline.”

— Michelle Fox

Rogers shares tumble as DuPont deal collapses

Shares of Rogers Corp, the engineering materials maker, tumbled on Wednesday after a planned $5.2 billion sale of the company to DuPont De Nemours was terminated.

“Rogers is currently evaluating all options to determine the best path forward in response to DuPont’s notice,” the company said in a statement.

DuPont said after the close on Tuesday that the companies have been unable to obtain clearance from all required regulators in a timely manner. The deal was first announced on Nov. 1 of last year.

Rogers shares cratered more than 43%, while DuPont’s stock rose about 6%.

Stocks open lower as market braces for Fed decision

Stocks opened lower as Wall Street awaited the Fed’s lastest policy decision.

The Dow Jones Industrial Average fell 95 points, or roughly 0.3%. The S&P 500 futures and Nasdaq Composite edged down 0.3% and 0.2%, respectively.

— Samantha Subin

As Fed meets, traders are betting it stops hiking rates at just above 5% next year

Investors in the fed fund futures market are betting the Federal Reserve will take its fed funds rate just above 5% before stopping rate hikes next year.

The Federal Reserve was meeting Wednesday and is expected to raise its fed funds rate by 75 basis points when it releases a policy statement at 2 p.m. ET.

The May contract was priced for 5.02% Wednesday morning. The Fed is currently targeting fed funds in a range of 3% to 3.25%.

“Over the last two weeks, it’s been bouncing around 5%,” said Ben Jeffery, BMO rate strategist. He said the futures market is also pricing for a 75 basis point rate hike for Wednesday afternoon and is giving more than 50/50 odds to a 50 basis point hike in December. A basis point equals 0.01 of a percentage point.

“The base case is 75 today, 50 in December and 25 in February,” said Jeffery.

Market pros expect the Fed will also signal Wednesday that it could begin raising rates at a slower pace, starting in December.

That signal could come from Fed Chairman Jerome Powell when he speaks to the media at 2:30 p.m. ET.

“Until we hear from Powell at 2:30, I think this is just noise,” said Michael Schumacher of Wells Fargo.

— Patti Domm

 

U.S.-listed China stocks rise on reopening speculation

Shares of Chinese companies listed in the U.S. rose again during Wednesday’s premarket trading amid rumors that China may pivot from its strict zero-Covid policy.

The KraneShares CSI China Internet ETF gained more than 2%, building on Tuesday’s 5.5% advance. The iShares China Large-Cap ETF added roughly 1%.

Individual stocks including Alibaba and Pinduoduo added 1% each.

— Samantha Subin

KeyBanc expects a more difficult holiday season for toy industry

This holiday season, the toy industry won’t see the double-digit growth it enjoyed for the past two years, according to KeyBanc Capital Markets.

Toy sales in 2020 and 2021 were fueled by stimulus, increased savings and stay-at-home activity.

“We believe current macroeconomic uncertainty, inflationary pressures, and restrictive financial conditions create a more difficult environment,” analyst Bradley Thomas wrote in a note Tuesday.

Consumers have already been pulling back from discretionary purchases at Target and Walmart this year, he noted. Mattel and Hasbro have also recently said they are preparing for more promotions compared to last year.

Thomas believes Ollie’s Bargain Outlet Holdings is best positioned this season thanks to its high-quality and robust inventory and closeout deals.

— Michelle Fox

Paramount Global, Estee Lauder and Caesars Entertainment among stocks making the biggest premarket moves

Companies reporting earnings results were among the stocks making the biggest moves during Wednesday’s premarket.

Paramount Global – The media company’s stock dove 8% in the premarket after it missed top and bottom line expectations for the recent quarter.

Caesars Entertainment – Caesars’ stock rallied 7.7% in premarket trading after the resort operator topped analyst estimates for both the top and bottom lines. Caesars also said its digital betting business turned profitable on an adjusted basis for the quarter, 12 months ahead of the company’s target.

Estee Lauder – The cosmetics maker’s stock sank 9.5% in premarket trading after it issued a weaker-than-expected outlook. Estee Lauder cited higher costs, a stronger U.S. dollar and Covid lockdowns in China among the reasons for the disappointing forecast.

— Peter Schacknow, Samantha Subin

ADP private payrolls, wages increased in October

The ADP Employment report for October showed that the private labor market is maintaining its strength even as interest rates rise and the Federal Reserve looks to cool off high inflation.

Private sector employment increased by 239,000 in October, the Wednesday report showed. The service sector added the bulk of jobs during the month, with large gains in hiring in leisure and hospitality and transportation, trade and utilities.

In addition, annual pay was up 7.7% on the year, but the momentum in wage gains is ebbing, according to the report. People who changed jobs were able to get a 15.2% pay increase in October, down from a 15.7% jump in September.

The ADP report comes just days before October nonfarm payrolls are released by the Bureau of Labor Statistics.

—Carmen Reinicke, Jeff Cox

Advanced Micro Devices jumps 6% despite earnings miss

Shares of Advanced Micro Devices rose 6%in premarket trading after posting results after the bell Tuesday that missed on both the top and bottom lines.

While the



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