S&P 500 closes near flat as Powell warns that more restrictive policy could be on the way: Live updates

The Dow Jones Industrial Average and S&P 500 closed lower Wednesday, while the Nasdaq Composite ended the day with gains.

The Dow fell 74.08 points, or 0.22%, to 33,852.66. The S&P 500 was lower by 0.04% at 4,376.86. Meanwhile, the Nasdaq Composite rose 0.27% to 13,591.75.

— Sarah Min

A shrinking number of bullish financial newsletter writers and a rising number of those believing stocks will suffer a short-term correction “creates conditions for the early June rally to resume,” according to the latest weekly survey by Investors Intelligence. “As contrarians, we note the market rarely fulfills expectations.”

The percentage of bullish advisors dropped to 50.0% in the latest week from a 19-month high of 54.3% the prior week. Those arguing in favor of a correction, or short-term pullback in prices, widened to 31.4% from 25.7% the week before. Bears fell again, to 18.6% of those polled, once more the lowest since stocks reached an all-time high in January 2022 and down from 20.0% last week.

The “bull-bear spread” narrowed to 31.4 points from 34.3 last week, which was the widest since Nov. 2021. A difference of 30 points or more “is the first sign of elevated risk,” II said.

— Scott Schnipper

Barclays initiated coverage of CME Group with an overweight rating and a price target of $215 per share, which implies upside of 20% from Tuesday’s close. CME shares rose more than 1%.

“We think there could be plenty of tailwinds, such as ongoing growth in newer products, an increased need by customers to hedge (e.g., regional banks may increasingly need to adopt CME rates futures products), market share gains in metals, and the ongoing adoption of passive investing (benefitting the S&P indices in particular),” analyst Benjamin Budish wrote.

— Fred Imbert, Michael Bloom

The Nasdaq Composite was the only index trading in positive territory shortly into the final hour of trading, while both the Dow Jones Industrial Average and the S&P 500 were lower.

Here are where the major averages are:

• The Dow Jones Industrial Average is lower by 129 points, or 0.38%
• The S&P 500 is lower by 0.25%
• The Nasdaq Composite is higher by 0.04%

— Sarah Min

Goldman Sachs’ Peter Oppenheimer believes there is a cap on global risk assets from here, as interest rates remain at a high level through the middle of next year.

“We’ve seen a big rally in equities, of course, over recent months. Much of that, I think, is reflecting an increasing degree of confidence that we can avoid recessions and that inflation has peaked,” the firm’s chief global equity strategist said on CNBC’s “Squawk on the Street” Wednesday.

In part, that can be attributed to the easing of some of the risks seen earlier in the year, such as the battle over the United States’ budget and the banking issue, he said.

“Nonetheless, that rally has been very narrowly driven by a few companies,” Oppenheimer explained. “The average company has been relatively flat and we think that will probably continue for some time in equity markets.”

— Michelle Fox

Utility stocks were lagging the broader market on Wednesday, with the Utilities Select Sector SPDR Fund (XLU) falling 1.5%.

That’s an unusually large move for a sector fund that typically sees only minor swings. There have only been three other days since the start of May when the XLU moved at least 1.5% in either direction, according to FactSet.

Entergy and AES Corp. were two of the worst performing utility stocks, falling roughly 3% each.

— Jesse Pound

Anheuser-Busch InBev is at an “attractive entry point” after its recent selloff, Deutsche Bank says.

The U.S. listed shares of Anheuser-Busch InBev are down about 15% this quarter, compared to a more than 6% gain for the S&P 500. Still, Deutsche Bank’s Mitch Collett has a buy rating on the brewing company behind Budweiser, and has a buy rating on the stock.

“We see both positives and negatives for ABI from this month’s data. However, the lack of deterioration is probably sufficient for the shares given the current valuation discounts no improvement in ABI’s US performance,” Collett said.

“As discussed in our recent report ‘Bud Light at the end of the tunnel’, we see scope for outperformance if the US improves and we continue to see ABI as well positioned for the long term,” Collett added.

— Sarah Min

Stocks were just about evenly split Wednesday afternoon. Advancers in the New York Stock Exchange outnumbered decliners about 1 to 1.

— Sarah Min

Transportation stocks are adding to the recent strength in industrial machinery and building products manufacturers, according to Chris Verrone, head of technical and macro research at Strategas Research Partners.

Almost 40 industrial stocks in the Russell 1000 index traded to new relative performance highs on Tuesday, with transportation companies marking “a welcome addition to an otherwise split market under the surface. While not quite as broad as the Industrials, the Consumer Discretionary sector continues to carry the flag of leadership as well, with both groups still offering credible alternatives to the widely-held impression of a ‘tech-only’ market,” Verrone wrote.

The largest five stocks by market value were: TransDigm, Howmet Aerospace, Johnson Controls, Carrier Global and Builders FirstSource.

Meanwhile, Steven Strazza of All Star Charts said on Twitter on Wednesday that the S&P 400 Mid Cap Industrials “are the first sector index to achieve new all-time highs” during the latest rally.

— Scott Schnipper, with reporting by Michael Bloom and Alex Harring

Current betting among interest rate futures traders is that there’s an 82% chance the Federal Reserve raises fed funds a quarter point to 5.25%-5.50% in four weeks, according to the CME FedWatch Tool.

That’s up from one month ago when the odds were only 52%.

— Scott Schnipper

Check out the companies making the biggest moves midday.

• Pinterest — Shares climbed more than 5% in midday trading. Wells Fargo upgraded Pinterest to overweight due to an Amazon partnership expected to take hold later this year and optimism that Pinterest can continue to boost user engagement.
• Cruise stocks — Carnival popped nearly 10%, Norwegian Cruise Line gained about 9% and Royal Caribbean added more than 3%, extending gains from Tuesday after Carnival reported a smaller-than-expected loss for its second quarter and issued strong guidance. The sector has been on a tear this year as it recovers from the Covid-19 pandemic.
• General Mills — Shares tumbled 4.4% after the maker of Betty Crocker mixes and Cheerios cereal turned in a mixed earnings report for its fiscal fourth quarter. The company exceeded Wall Street expectations on earnings, posting $1.12 in adjusted earnings per share against a consensus estimate of $1.07 from analysts polled by Refinitiv. But $5.03 billion in revenue missed analysts’ forecast of $5.17 billion.

Read the full list here.

— Michelle Fox

Needham analyst Laura Martin raised her price target on Amazon to $150 per share from $120 based on the potential of a new product from Amazon Web Services.

AWS held a product launch on Tuesday for AppFabric, a product designed to make it easier for employees to work across different applications with the help of artificial intelligence.

“Our key economic takeaway is that AppFabric should lower AWS customer churn, by increasing exit costs,” Martin wrote. The analyst has a buy rating on the stock.

Shares of Amazon were up slightly by 0.05% in midday trading at about $129 per share.

— Jesse Pound

Energy was the biggest advancer in the S&P 500, with the sector climbing nearly 1% around 12:30 p.m. ET. Nearly all names in the sector were trading in positive territory. Williams Companies posted the biggest gain, up by more than 2%.

The S&P 500 was just about evenly split between gainers and decliners. Six sectors were in the green, while five sectors declined.

The biggest laggards were utilities, materials and consumer staples.

— Sarah Min

Netflix shares rose more than 4% during midday trading. Oppenheimer hiked its price target Tuesday on the streaming stock to $500 from $450 after noting that Netflix may be phasing out its basic ad-free plan. The new price target implies upside of nearly 20% from Tuesday’s close.

“Increasing target to $500 (was $450) in anticipation of higher subscribers on bullish indicators for Paid Sharing and higher rev/sub with potential discontinuation of lowest-priced ad-free plan (testing in Canada),” analyst Jason Helfstein wrote on Tuesday.

“Plan shift from lowest-priced ad-free tier is obvious next step, unlocking ~$15.50 rev/sub (advertising + subscription) vs. $9.99 (ad-free) at $6.99 ad-plan unlocking ~$4.4B in annual revenue or 13% of ’23E revenue.”

— Sarah Min

The current economic environment is fostering fundamental change to how investors will find profitability, according to BlackRock.

The firm outlined so-called “megaforces” in its midyear outlook that it says are already shifting returns from broad assets and is instead “marking a break from the four decades of steady growth and inflation known as the Great Moderation.”

Analysts led by BlackRock investment institute head Jean Boivin and vice chairman Philipp Hidebrand outlined the “megaforces” as consisting of the rise of artificial intelligence, geopolitical-driven globalization, the move toward a net-zero economy, an aging population and an evolving financial system.

“The key is to identify the catalysts that can supercharge them and the likely beneficiaries – and whether all of this is priced in today,” the note said.

— Brian Evans

Shares of satellite-to-smartphone connectivity venture AST SpaceMobile plunged as much as 30% in trading after issuing a common stock offering, as well as responded to a report that raised concerns about the company.

AST’s Executive Vice President of Strategy Scott Wisniewski told CNBC the common stock offering of 12 million shares sold at an average price of $4.75 share, raising about $60 million in new capital for the company, and closes in two days.

“That’s why the stock is off … [due to] price discovery the next day,” Wisniewski said. “We saw a window to raise capital before the July 4 holiday.”

Alongside the prospectus, AST also issued a response to a report that raised concerns about the company’s burn rate, future audit opinion, and plans to raise funding.

AST SpaceMobile said the article – published more than two weeks ago and with attribution to a company officer – incorrectly stated the company’s cash burn rate. In the report, the company officer also said AST’s auditor confirmed a projection of more than 12 months in cash on hand. In a securities filing on Tuesday evening, AST clarified that “our need for capital in the future may result in our independent auditors or management expressing substantial doubt about our ability to continue.”

Wisniewski noted that AST did not request the publication update its article, but issued the filing because “we had to correct a few statements that were inaccurate.”

AST SpaceMobile stock’s intraday drop, from its previous close of $6.37 a share, erased its year-to-date gains.

– Michael Sheetz

The Nasdaq Composite turned positive as investors resumed tech buying. The index rose 0.5% during midday trading after falling as much as 0.44% earlier in the session.

Amazon was higher more than 1%, while Tesla jumped 3%. Netflix shares rose more than 3%.

On the other hand, Nvidia remained in negative territory, falling 0.8%, though it was off its lows of the session. Chip names were also falling, with the iShares Semiconductor ETF lower by 0.44%.

— Sarah Min

More than two-thirds of the 30 stocks in the Dow were trading lower shortly after 10:45 a.m. ET on Wednesday, keeping the blue-chip average down.

In total, 21 stocks were down, led by Travelers Companies with a 2.4% drop. On the other side of the spectrum, Salesforce was the best performing member with a gain of 1.1%.

Those losers pulled the index to trade around 0.3% below flat. At the same time, the S&P 500 was about 0.1% above flat and the Nasdaq Composite was up 0.6%.

— Alex Harring

Fed Chair Jerome Powell said the central bank will be more restrictive moving forward, noting there’s a chance of rate hikes in consecutive meetings.

“We believe there’s more restriction coming,” Powell said during a monetary policy session in Sintra, Portugal. “What’s really driving it … is a very strong labor market.”

— Fred Imbert, Jeff Cox

A review of the consumer confidence report for June, which came in stronger than expected, indicated retail investors are “jumping on the bandwagon,” according to Wolfe Research. However, the firm says traders are mistaken, and continues to see a downturn ahead.

“Looking at the details of the report, expectations for stock prices to increase reached their highest level since December 2021, consistent with our view that retail investors are jumping on the bandwagon and FOMO is helping to drive the market higher over the near-term,” the firm’s Chris Senyek wrote on Wednesday.

“At the same time, we believe that the divergence between consumers’ views of future economic prospects vs. the present situation remains consistent with a recession hitting at some point in the second half of the year.”

— Sarah Min

Stocks opened lower Wednesday.

The Nasdaq Composite lost 0.3%, while the Dow Jones Industrial Average fell 65 points, or 0.2%. The S&P 500 lost 0.3%.

— Sarah Min

Atlantic Equities is bullish on a regional bank stock that recently acquired a peer firm.

Analyst John Heagerty highlighted “a combination of an attractive valuation, the strong likelihood of a supportive buyback in 2024 and an under-appreciated business model” as underpinning the optimistic outlook.

CNBC Pro subscribers can read the full story here.

— Brian Evans

Wells Fargo says a partnership later this year with retail giant Amazon will help Pinterest stock climb.

The firm upgraded shares of Pinterest on Tuesday. Pinterest stock climbed more than 4% in premarket trading.

“We believe Pinterest is making the optimal strategic move to outsource monetization to third-parties to overcome its attribution and scale challenges,” analyst Ken Gawrelski wrote. “This includes an announced partnership with Amazon, now expected to be live in time for the 2023 holiday season, and future expected partnerships with other scaled retail media networks.”

CNBC Pro subscribers can read the full story here.

— Brian Evans

Morgan Stanley thinks Delta Airlines stock is poised for strong growth after the company’s investor day.

“This was not just a message of a rising tide – mgmt. presented a clear, convincing, data driven story of idiosyncratic brand/franchise strength which should drive premium demand upside in an upturn and resilience in a downturn,” analyst Ravi Shanker said of the investor day.

Delta stock added about 0.5% in premarket trading.

CNBC Pro subscribers can read the full story here.

— Brian Evans

Mortgage rates turned higher again last week. But the increase did not cut into mortgage demand, as buyers sought newly built homes.

Total mortgage application volume rose 3% compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. An additional adjustment was made for the Juneteenth holiday.

Applications for a mortgage to purchase a home rose 3% for the week but were 21% lower year over year. These applications have increased for three straight weeks to the highest level since early May, despite still-high mortgage rates.

— Diana Olick

U.S. Treasury yields fell on Wednesday as investors considered the path ahead for interest rates and awaited fresh comments from Federal Reserve Chairman Jerome Powell. He is due to speak alongside central bank officials from around the world at a European Central Bank Forum in Portugal.

At 4:17 a.m. ET, the 10-year Treasury yield was down by less than one basis point to 3.7621%. The 2-year Treasury yield was last trading at 4.7472% after falling by almost two basis points.

Yields and prices have an inverted relationship and one basis point equals 0.01%.

— Sophie Kiderlin

The onshore yuan slipped by 0.1% to around 7.23 yuan per U.S. dollar after China refrained from setting a stronger-than-expected fix for a third day in a row. The offshore yuan was trading similarly.

The People’s Bank of China set its daily mid-point reference rate for its managed currency at 7.2101 yuan per U.S. dollar, versus a Reuters estimate for 7.2092 yuan per U.S. dollar.

— Clement Tan

The U.S. is considering new restrictions on exports of artificial intelligence chips to China, according to the Wall Street Journal.

Citing people familiar with the matter, the Journal reported the U.S. Commerce Department could stop shipments of chips made by Nvidia and other companies to customers in China as early as July.

Shares of mainland Chinese semiconductor companies tumbled on Wednesday, with SMIC losing 2.42% and Hua Hong Semiconductor sliding 3.19%

— Lim Hui Jie

China’s industrial firms recorded a 18.8% tumble in cumulative profits in the first five months of 2023 from the year before, official data showed on Wednesday.

This figure was 1.8 percentage points lower than the 20.6% decline in China industrial profits for January to April, China’s National Statistics Bureau said in a statement.

In monthly figures occasionally published by the NBS, China industrial profits contracted by 12.6% in May from a year earlier.

— Clement Tan

Australia’s weighted inflation rate for May came in at 5.6%, sharply lower than April’s figure of 6.8% and lower than the 6.1% expected by economists polled by Reuters.

Headline inflation for May came in at 5.8%, lower than April’s figure of 6.9%. It was the lowest recorded rate since April 2022.

— Lim Hui Jie

AeroVironment shares jumped more than 5% in extended trading after the military drone maker beat fiscal fourth quarter revenue expectations, and issued a better-than-expected full-year revenue outlook.

AeroVironment reported revenue of $186.0 million, greater than analysts’ expectations for $164.1 million, according to consensus estimates from Refinitiv. Additionally, the firm said it expects full-year revenue of $630 to $660 million, compared to estimates for $600 million.

— Sarah Min

Futures tied to the Nasdaq 100 slid 0.3% as a host of big semiconductor companies slipped on Tuesday night.

Shares of Nvidia tumbled more than 2%, while Advanced Micro Devices and Marvell Technology each fell more than 1%. EV giant Tesla slid about 1%, as did semiconductor stock Broadcom.

The action comes after the tech-heavy Nasdaq Composite rebounded during regular trading earlier in the day. The index gained 1.65% as investors snapped up shares of tech companies.

–Darla Mercado

Markets will be looking for clarity on Wednesday when Federal Reserve Chairman Jerome Powell joins a monetary panel discussion in Sintra, Portgual, at 9:30 a.m. ET.

The U.S. central bank leader will be joined by global counter parts Christine Lagarde, the president of the European Central Bank, along with Bank of England Governor Andrew Bailey and Kazuo Ueda, governor of the Bank of Japan.

Powell’s remarks come just two weeks after the Fed voted to hold interest rates steady as it evaluates the impact of 10 rate hikes totaling 5 percentage points since March 2022. In recent statements, the chairman has said he expects additional hikes, though at a slower pace.

Markets largely expect the Fed to increase rates one last time this cycle at its July meeting, then go into an extended pause. Fed officials, though, indicated at the June meeting that they see two more increases.

—Jeff Cox

U.S. stock futures opened lower Tuesday night.

Dow Jones Industrial Average futures fell by 10 points, or 0.04%. S&P 500 futures and Nasdaq 100 futures dipped 0.08% and 0.14%, respectively.

— Sarah Min