NEW YORK (AP) — U.S. stocks are drifting Wednesday as Wall Street waits to hear from the Federal Reserve about where interest rates may be heading .
The S&P 500 was down 0.3% in afternoon trading, coming off its first losing month in the last six. The Dow Jones Industrial Average was up 142 points, or 0.4%, as of 1:43 p.m. Eastern time, and the Nasdaq composite was 0.3% lower.
CVS Health tumbled 16.6% after reporting weaker results for the latest quarter than analysts expected. It said it’s been hurt by increased costs at its Medicare Advantage business, and it cut its forecast for profit over the full year.
Other big names also dragged on the market following their profit reports, including Starbucks , Advanced Micro Devices and Super Micro Computer. But the focus is on Washington, D.C., where the Federal Reserve will announce its latest move on interest rates in the afternoon.
No one expects the Fed to make any change to its main interest rate, which is sitting at its highest level since 2001 in hopes of grinding down on the economy enough to get inflation under control. But Fed Chair Jerome Powell will give a press conference after the rate announcement, and he could give some guidance about the chances for a cut to rates later this year.
He recently hinted rates may stay high for a while as Fed officials wait for more confirmation inflation is heading down toward their 2% target. That was a disappointment for Wall Street, after the Fed earlier had indicated it was penciling in three cuts to rates during 2024.
Traders had been even more optimistic after coming into the year forecasting six or more cuts to rates. Now, many are betting on the possibility of just one, if any, according to data from CME Group. A string of reports on inflation this year that have come in stubbornly higher than forecast has dashed hopes for multiple rate cuts.
Without the benefit of easing rates, which can goose the economy and investment prices, companies will need to deliver better profits.
Starbucks dropped 17.2% after falling short of expectations for both profit and revenue in the latest quarter. Sales trends weakened at its stores outside the United States in particular, and it cut its full-year forecasts for profit and revenue.
Super Micro Computer, which has been one of Wall Street’s hottest stars, gave back 14.6% despite topping expectations for profit. The company, which sells server and storage systems used in AI and other computing, fell shy of analysts’ forecasts for revenue. Expectations had bult up after its stock had already tripled this year amid a broader frenzy on Wall Street around artificial-intelligence technology.
Advanced Micro Devices dropped 9.1% despite reporting profit that matched expectations. Its revenue came in a bit shy of forecasts, as did the midpoint of its forecasted range for revenue in the current quarter.
They helped to offset a 1.6% gain for Amazon, which reported stronger profit for the latest quarter than analysts expected. The retail behemoth credited reaccelerating growth at its cloud-computing business, in part, as it benefits from demand for AI.
Chemical producer DuPont was another winner, up 7.1%, after reporting stronger profit than expected. It said demand from customers in the semiconductor industry continued to recover.
In the bond market, Treasury yields eased a bit following some weaker-than-expected reports on the economy.
One report from the Institute for Supply Management said the U.S. manufacturing sector unexpectedly fell back into contraction last month. Economists had been looking for one of the hardest-hit areas of the economy to stay steady. Perhaps more concerningly, manufacturers also reported prices were rising at a faster rate.
A separate report said U.S. employers were advertising slightly fewer jobs at the end of March than economists expected. The hope on Wall Street has been that a cooldown in the number of openings could help keep the job market in check, not allowing it to get so hot that it adds upward pressure on workers' wages and inflation overall. The downside is that if it weakens too much, a major support for the economy could give out.
The yield on the 10-year Treasury slipped to 4.65% from 4.68% late Wednesday.
The two-year Treasury yield, which more closely tracks expectations for the Fed, eased to 5.01% from 5.04%. It's still near its highest level since November.
In stock markets abroad, many exchanges were shut for holidays. Tokyo’s Nikkei 225 slipped 0.3%, and London’s FTSE 100 was down 0.3%.
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AP Writers Matt Ott and Zimon Zhong contributed.