Dow edges higher as investors weigh tech earnings, ahead of Fed update – MarketWatch

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U.S. stocks on Wednesday were set to climb tentatively higher as investors awaited a fresh policy update from the Federal Reserve and parsed many corporate results, during the busiest week of the quarterly earnings reporting period.

How are stock benchmarks trading?

On Tuesday, the Dow Industrial Average  DJIA, -0.10% fell 85.79 points, or 0.2%, to 35,058.52. The The S&P 500  SPX, -0.11% declined 20.84 points, or 0.5%, to 4,401.46 to snap a five-session winning run. The tech-heavy Nasdaq Composite  COMP, +0.24% dropped 180.14 points, or 1.2%, to 14,660.58, its largest one day fall since May 12.

What’s driving the market?

As stocks remain in reach of fresh all-time highs, investors are readying for an update from the Federal Reserve due at 2 p.m. Eastern Time, which will be followed by a news conference led by Chairman Jerome Powell a half-hour later.

Investors are hoping for clarity on when the central bank will begin tapering of monthly bond purchases, though economists say that may not be forthcoming.

“If we hear today about more talking about tapering but without specificity, if we hear the word ‘transitory’ a lot, if we hear the word ‘patient’ often, and if we hear about delta throughout the press conference, I would expect a steepening of the yield curve again because bond holders don’t want to hear this in the face of the inflation reality,” wrote Peter Boockvar, chief investment officer at Bleakley Advisory Group, in a Wednesday note.

Meanwhile, the selloff in technology stocks in Hong Kong and China abated on Wednesday, as the Hang Seng HSI, +1.54% closed 1.5% higher after consecutive drops of at least 4% resulting from unexpected regulatory actions by the Chinese government.

Read: Market fragility lingers as VIX climbs even with U.S. stocks rising to peaks, BofA says

Check out: Watch for the Fed to tiptoe toward tapering this week

And: Fed is walking ‘bit of a tightrope’ between downside risks and inflation

On the public health front, the U.S. Centers for Disease Control and Prevention on Tuesday recommended that Americans — even those who are fully vaccinated — in parts of the country with “substantial or high” rates of COVID-19 go back to wearing masks in public indoor spaces as the delta variant of the coronavirus results in rising cases of Covid.

Looking ahead, social-media group Facebook FB, online payments processor PayPal PYPL, chip group Qualcomm QCOM and auto maker Ford F will report after the close of Wednesday’s session.

On the data front, the U.S. trade deficit in goods rose 3.5% in June to record $91.2 billion, and advanced U.S. wholesale inventories climbed 0.8%, while retail inventories increased by 0.3% last month.

Which companies are in focus?
  • Shares of Boeing Co. BA rose in premarket trading Wednesday, after the aerospace and defense giant swung to a surprise profit, amid higher commercial volume and lower period costs.
  • Pfizer IncPFE said Wednesday that a third dose of its COVID-19 vaccine likely provides further protection against the delta variant, which is more infectious and thought to be driving the recent surge in cases, hospitalizations, and deaths in the U.S.
  • McDonald’s CorpMCD reported second-quarter net income totaling $2.219 billion, or $2.95 per share, up from $483.8 million, or 65 cents per share, last year.
  • Bristol-Myers Squibb Co. BMY said Wednesday it swung to a profit of $1.055 billion, or 47 cents a share, in the second quarter, after a loss of $85 million, or 4 cents a share, in the year-earlier period. 
  • Humana Inc. HUM reported second-quarter profit and revenue that beat expectations, but maintained its full-year adjusted earnings outlook, while saying it expects to record a $1 billion gain in the current quarter on its ownership of Kindred at Home.
  • Tapestry IncTPR said Wednesday that it will raise wages for all U.S. employees to at least $15 per hour, effective Sept. 5. 
  • Apple Inc. AAPL, -2.02% shares slipped 1.5% fell in premarket trading after the iPhone maker said profit nearly doubled, but also projected a growth slowdown.
  • Microsoft Corp. MSFT, -0.13% shares rose 0.8% after the software giant topped $60 billion in annual earnings for the first time at the end of a record-breaking year.
  • Alphabet Inc. GOOGL, +3.38% stock jumped over 3% after the Google parent reported strong advertising sales that sent revenue and earnings well past analysts’ estimates.
  • Starbucks Corp. shares SBUX, -3.35% fell over 2% after the coffee group swung to a quarterly profit, but also reported rising costs for Americas operations.
What are other markets doing?
  • The yield on the 10-year Treasury note TMUBMUSD10Y, 1.255% was up 2 basis points at 1.26%. Yields and debt prices move in opposite directions.
  • The ICE U.S. Dollar Index DXY, +0.25%, a measure of the currency against a basket of six major rivals, was up 0.1%.