Stock market live Wednesday: Fed says no hike soon, Dow falls, Nasdaq 10,000

Tech stocks reasserted the leadership, lifting the Nasdaq Composite to a new record, but the broader market came under pressure with the S&P 500 falling for the second straight day. The Federal Reserve announced it will keep interest rates near zero through 2022 and continue its asset purchases at the current pace.

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• Nasdaq closed up 0.67% for its eighth positive day in nine at a new record
• This was the Nasdaq’s first close above 10K, after hitting a new intraday all-time high of 10,086.89
• Nasdaq is up 11.68% year to date and up 51.1% from its March 23 low
• Nasdaq 100 biggest point impact: Microsoft, Apple, Amazon, Tesla all with double-digit point contributions and all hitting new intraday all-time highs
• Sectors: 10 out of 11 sectors were negative Wednesday led by Energy down 4.92% for its worst day since May 1
• S&P 500 closed down 0.53% for its second straight negative day
• S&P 500 is down 1.26% year to date and is 5.99% below its intraday record high from Feb. 19
• Dow closed down 1.04% for its second straight negative day
• Dow is down 5.43% year to date and 8.7% below its intraday record –Francolla

The Nasdaq closed above 10,000 for the first time ever, but the Dow and the S&P 500 fell for the second consecutive day. The Dow closed down 282 points, or 1%, while the S&P 500 dipped 0.5% and the Nasdaq rose 0.7%. –Pound

Bank stocks tumbled in afternoon trading as Federal Reserve Chairman Jay Powell said that the central bank remains committed to keeping rates near zero for two years. The Financial Select Sector SPDR Fund slid more than 3%. Shares of Wells Fargo dropped more than 8%, while Citigroup and Bank of America each posted a loss of 5%. JPMorgan traded 3.5% lower, with Morgan Stanley and Goldman Sachs also in the red. Banks typically benefit when rates are higher since it widens the spread between how much they pay to borrow compared with their profits from loans. –Pound

Chair Powell has concluded his news conference, and the Dow is down about 100 points. The next meeting of the Federal Open Markets Committee is scheduled for July 28 and 29. –Pound

“The evidence of one jobs report is that the labor market may have hit bottom in May. We don’t know that, we’re going to see,” Fed Chair Jerome Powell said. “Many forecasters widely expect a recovery over the second half of the year, so it is possible. We’re not going to overreact to a single data point. We’re going to be very careful about reaching any conclusions about good data or bad data. We’re going to be here with our tools supporting this economy for as long as it’s needed.” –Stevens

The Dow and S&P 500 were headed for another decline on Wednesday as traders digested the latest policy announcement from the Federal Reserve. With roughly one hour left in the trading session, the Dow traded more than 200 points lower, or 0.8%. The S&P 500 slid 0.5%. The tech-heavy Nasdaq was headed for a record close, gaining 0.6%. —Imbert

Fed Chair Powell made it clear that the central bank has no intention of raising interest rates anytime soon. “We’re not thinking about raising rates,” he said. “We’re not even thinking about thinking about raising rates.” — Stevens

Federal Reserve chair Jerome Powell renewed the central bank’s diversity and inclusion promise and condemned racism in society and the economy on Wednesday. “I want to acknowledge the tragic events that have again put a spotlight on the pain of racial injustice in this country,” said Powell. “The Federal Reserve services the entire nation. We operate in and are a part of many of the communities across the countries where Americans are grappling with and expressing themselves on issues of racial equality. I speak through my colleagues through the Federal Reserve system when I say there’s no place at the Federal Reserve for racism and there should be not place for it in our society. Everyone deserves the opportunity to participate fully in our society and in our economy.” — Fitzgerald

Powell said that central bankers “received a briefing” about the possibility of setting targets for interest rates at different maturities but were not sure it would be a useful tool for the Fed. “We also reviewed the historical and foreign experience with targeting interest rates along the yield curve. Whether such an approach would usefully complement our main tools remains an open question,” Powell said. — Pound

The Dow was last down 40 points, or 0.14% while the S&P 500 added 0.2% and the Nasdaq Composite advanced 1%. The major indexes are well off their session lows, however, after the Fed’s signal that it will maintain low interest rates through 2022 and continue to purchase financial assets and expand its balance sheet. — Franck

The Fed has undertaken massive stimulus measures to support the economy amid the coronavirus pandemic and those moves are starting to yield fruit. The central bank said Wednesday “financial conditions have improved, in part reflecting policy measures to support the economy.” Since March, the Fed has slashed its overnight rate to near zero and launched an open-ended asset-purchase program. The central bank has also started buying corporate bonds through exchange-traded funds to help the credit market. — Imbert

Fed Chairman began speaking at 2:30 p.m. and is expected to answer questions from reporters. Watch the live feed here.

Interest rate projections released by the Federal Reserve show that an overwhelming majority of FOMC participants expect the benchmark interest rate to stay at its current level through 2022. The Fed’s “dot plot” showed that just two participants think it would be appropriate to raise the key rate before the end of that year. — Pound

In its statement, the Fed said it will continue to expand its already-massive (more than $7 trillion) balance sheet at least at the current pace for months. It said:

“To support the flow of credit to households and businesses, over coming months the Federal Reserve will increase its holdings of Treasury securities and agency residential and commercial mortgage-backed securities at least at the current pace to sustain smooth market functioning, thereby fostering effective transmission of monetary policy to broader financial conditions.” — Franck

The Federal Reserve Board members and presidents projected unemployment to average 9.3% in the fourth quarter of 2020, four percentage points lower than the official reading for May. The projections decline to 6.5% for the fourth quarter of 2021 and 5.5% for the fourth quarter of 2022, which is still well above where the unemployment rate was before the pandemic. — Pound

U.S. equities bounced out of negative territory immediately after the Fed’s 2 p.m. ET announcement with Dow industrials trading up less than 0.1% as of the latest reading, well off its 330-point decline earlier in the session.

The S&P 500 gained 0.17% while the Nasdaq Composite remained the relative leader with an advance of 1%. Top performers in the S&P 500 included Salesforce.com, Nvidia and Microsoft. — Franck

The Federal Reserve kept interest rates near zero during its June meeting and said they’ll aim to keep them there until 2022 as the economy recovers from Covid-19.

Fed members, through their forecasts in the so-called “dot plot,” expect the federal funds rate to run between 0% and 0.25% through 2022, with the long-run rate at 2.5%.

Central bankers led by Chair Jerome Powell projected Wednesday that the economy will shrink 6.5% in 2020, a year that saw an unprecedented cessation in commerce to slow the coronavirus. However, the Fed expects GDP to grow 5% in 2021 followed by 3.5% in 2022.

Powell will answer questions from reporters at 2:30 p.m. ET. Follow live updates from the Fed’s press conference here. — Franck, Cox

Stocks trading below $1 per share have an average gain of 79% in the past week, according to a note from the Institutional Equity Derivatives team at Citadel Securities obtained by CNBC. The firm evaluated the 29 stocks in the Russell 2000 with a share price less than a buck and determined the group has rallied nearly 80% a piece. Some of these major moves in penny stocks can be attributed to the rampant retail investing going on the stock market right now. “This all amounts to what seems like a retail short-squeeze feeding frenzy that has reached blow-off top proportions,” Citadel Securities said in the note. – Fitzgerald

Tesla — Shares of Tesla surged nearly 8% to above the $1,000 threshold, hitting an all-time high. The gains came after CEO Elon Musk signaled internally a push into “volume production” of its Semi commercial truck.

AMC Entertainment — Shares of the movie theater chain jumped 10% after the company said it will reopen all theaters in the U.S. and UK next month with limited capacity for some of the highly anticipated July releases.

Five Below – Shares of the retailer soared more than 11% after Wall Street analysts turned more bullish on the company and predicted a sales recovery. Five Below said 90% of its stores have reopened. It reported weaker-than-expected quarterly earnings, however.

Check out more midday movers here. –-Li

The Dow Jones Industrial Average built on its losses from the previous session, sliding more than 100 points, or 0.6% as traders braced for the Federal Reserve’s latest announcement on monetary policy. The S&P 500 also dipped 0.2%. The Nasdaq Composite bucked the negative trend by rising more than 0.6% and hitting a fresh record high. –Imbert

Treasury Secretary Steven Mnuchin said Wednesday that he thinks Congress will need to inject more money into the U.S. economy to help support businesses, but added that future stimulus should be thoughtful and more tailored. Mnuchin, who spoke before the Senate Small Business Committee, said “I think at the point when we were in an emergency, we had to put a lot of money into the economy and we knew that it would not be perfection. …. Whatever we need to do going forward needs to be more targeted.” –Franck

Shares of Wells Fargo fell sharply after the bank’s chief financial officer said at a conference that bank expects another large build of loan loss reserves for the second quarter. The comments from CFO John Shrewsberry at the Morgan Stanley Virtual US Financials Conference are more pessimistic than Morgan Stanley CEO James Gorman’s statement on the topic on Tuesday. The stock was down roughly 6.7% for the session. –Pound, Giel

Tesla jumped more than 6% to an all-time high of $1,011.65, the first time the electric car-maker has crossed the $1,000 threshold. Wednesday’s gains added to its huge rally this year that saw the stock more than double. Its recent momentum was fueled by its electric vehicle sales data out of China that showed a recovery from the pandemic. Meanwhile, CEO Elon Musk is pushing the company to begin “volume production” of its Semi commercial truck, according to a memo obtained by CNBC. —Li

As the U.S. economy continues to reopen, some states that have been more aggressive in loosening restrictions imposed due to the coronavirus are seeing higher infection and hospitalization rates are drawing attention. Arizona and Texas both have witnessed climbs in cases and hospitalization rates. In Arizona, there were 618 new cases Tuesday, representing a 2.2% increase, though hospitalizations rose 0.8%, according to the Covid Tracking project. Texas saw 1,637 new cases, also a 2.2% gain, and 23 more deaths. Over the past seven days, the worst numbers are coming from Arizona, Arkansas, Florida, Georgia, Nevada, New Mexico, North and Sound Carolina, Oregon and Utah, according to Ian Shepherdson, chief economist at Pantheon Macroeconomics. While rising testing levels are responsible in a few cases, “we expect the re-imposition of restrictions in some cities/states over the next few weeks,” Shepherdson. – Cox

Shares of bankrupt companies were down big in morning trading on Wednesday after a wild run fueled by speculation by retail investors. Car renter Hertz dropped 36%, while Whiting Petroleum and J.C. Penney plunged 31% and 26%. Chesapeake Energy, which is preparing for a bankruptcy filing, fell 30% after being halted for trading briefly. These names have seen their stock skyrocket in recent days as investors bet on a turnaround with the economic conditions improving suddenly. With Wednesday’s drop, shares of Hertz and Whiting are still up 180% and 130%, respectively, this month. However, many on Wall Street are warning against buying into those bankrupt names as equity holders are last in line for payout and typically get wiped out in bankruptcy. -Li

Shares of Starbucks ticked 4% lower on Wednesday after the world’s largest coffee chain said it lost as much as $3.2 billion in sales in latest quarter due to coronavirus pandemic. Starbucks, which withdrew its prior outlook in April, is forecasting a net loss per share of 64 cents to 79 cents and adjusted losses per share of 55 cents to 70 cents for quarter ending June 28. For the full fiscal year, the company expects same-store sales in its two largest markets — the United States and China — to decline 10% to 20%. Starbucks does expect earnings to improve in the fourth quarter. — Fitzgerald

• JPMorgan downgraded JetBlue to underweight from neutral and United Airlines to neutral from overweight.
• Jefferies upgraded Etsy to buy from hold.
• Baird downgraded Cisco to neutral from outperform.
• RBC downgraded Chevron to underperform from sector perform.
• Wedbush downgraded Micron to neutral from outperform.
• Wedbush raised its price target on Tesla to $1000 from $800.
• Bank of America raised its price target on Alphabet to $1,610 from $1,420.

Pro subscribers read more here. — Bloom

Tech shares reasserted their leadership on Wednesday, lifting the Nasdaq Composite to an intraday high of 10,027.50. Apple rose 1.3% in morning trading to a fresh record of $349.35 a share. E-commerce giant Amazon jumped another 2%, hitting an all-time high of $2,653.71. Facebook also refreshed its record, rising 0.6% on Wednesday. –-Li

Shares of Five Below rose more than 11% on Wednesday after the company reported earnings for its fiscal first quarter and gave updates about business at its reopened stores. The company missed on the top and bottom lines for the quarter, but several Wall Street analysts cited the companies sales trends in the second quarter as a reason for optimism. The discount retailer’s CEO said on an investor call that comparable sales are up 8% in the second quarter so far, according to a transcript from FactSet. About 90% of the company’s stores have now reopened, and Five Below said it still plans to open 100 or more new stores this year. –Pound

The S&P 500 started Wednesday’s session in the green, gaining about 0.2%. The Nasdaq Composite rose 0.2% to another all-time high as megacap tech built on its strong momentum. The Dow Jones Industrial Average was flat at the open as a drop in Boeing shares weighed on the benchmark –Li

The consumer price index fell 0.1% in May, marking the third straight month of declines, Labor Department data showed Friday. The slight dip came after a 0.8% plunge in April amid the pandemic, which was the largest decline since December 2008. Excluding the volatile food and energy components, the so-called core CPI fell 0.1% in May after dropping 0.4% in April, the largest decline since the series started in 1957. “I still believe that with screwed up supply chains and a lot of capacity taken off line, as demand rebounds over the next 6-12 months, along with an extraordinary amount of monetary tinder, inflation will come our way,” Peter Boockvar, chief investment officer at Bleakley Advisory Group, said in a note. –Li

Federal Reserve officials will indicate where they see GDP, unemployment and inflation heading as the U.S. begins its recovery from the coronavirus pandemic. As the Federal Open Market Committee wraps up its two-day meeting Wednesday, markets are expecting little in the way of policy changes, but will get to see how policymakers see the recovery unfolding. In addition, the Fed will release its “dot plot” of individual members’ projections for interest rates. While there likely won’t be any shifts soon, the plot will give an indication on whether members see negative rates as a possibility. Chairman Jerome Powell will hold a news conference afterwards. –Cox

Tech has been leading the market higher, and Bank of America believes these names will continue to outperform. On Wednesday the firm raised its target on Alphabet to $1,610 from $1,420 based on ad revenue and monetization trends. The new target is about 11% above where the stock currently trades. When it comes to Facebook, the firm believes the company “has strong ability to capitalize on the surge in usage seen during shelter in place orders.” The firm’s new $265 target represents 11% upside. Bank of America also raised its target on Pinterest to $24 to $22, and on Snap from $20 to $24. –Stevens

Tesla shares rose more than 5% in the premarket after Reuters reported CEO Elon Musk wants to bring the company’s Semi truck to “volume production.” Musk noted in a memo, according to Reuters, that production of the Semi’s powertrain and battery will take place in Nevada while other components will be built in other states. In April, Tesla said it would delay Semi production and delivery until 2021. —Imbert

Major tech stocks moved higher in premarket trading, continuing a strong rally for the sector that pushed the Nasdaq Composite above 10,000 briefly on Tuesday. Facebook, Amazon and Apple rose more than 1% in premarket trading, while Alphabet and Netflix posted smaller gains. —Pound

Dow Jones Industrial Average futures fell 48 points, or 0.2%, as traders braced for an upcoming monetary policy announcement from the Federal Reserve. S&P 500 futures were also little changed. Nasdaq-100 futures, however, rose 0.5% as shares of Facebook, Amazon, Apple and Netflix traded higher in the premarket. Both the Nasdaq-100 and Nasdaq Composite are coming off record-setting sessions, with both averages breaking above 10,000 for the first time on Tuesday. —Imbert

–With reporting from Jeff Cox, Yun Li, Maggie Fitzgerald, Dawn Giel, Fred Imbert and Michael Bloom.

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