CVS, Starbucks Drop Sharply

Indexes finished mixed after Fed chief's remarks
By Newser Editors and Wire Services
Posted May 1, 2024 3:41 PM CDT
Stocks Finish Mixed After Fed Chief's Remarks
A screen displays a news conference with Federal Reserve Chairman Jerome Powell as traders work on the floor at the New York Stock Exchange, Wednesday, May 1, 2024.   (AP Photo/Seth Wenig)

US stocks finished mixed Wednesday after the head of the Federal Reserve said the cuts to interest rates that Wall Street craves so much are still likely, even if they're delayed because of stubbornly high inflation.

  • The S&P 500 fell 17.30 points, or 0.3%, to 5,018.39 after seeing a big afternoon rally evaporate.
  • The Dow Jones Industrial Average rose 87.37 points, or 0.2%, to 37,903.29.
  • The Nasdaq composite fell 52.34 points, or 0.3%, to 15,605.48.
On the downside for financial markets, the Fed's chair said inflation is taking longer than expected to get under control. But he also said its next move is unlikely to be a rate hike.

The Fed also offered financial markets some assistance by saying it would slow the pace of how much it's shrinking its holdings of Treasurys. Such a move could grease the trading wheels in the financial system, offering stability in the bond market, the AP reports. Powell said the Fed did it to reduce the "risk of money markets showing stress." Traders themselves had already downgraded their expectations for rate cuts this year down to one or two, if any. That's because they saw the same string of reports as the Fed, which showed inflation remaining stubbornly higher than forecast this year. Powell's comments Wednesday were largely seen as less harsh than feared.

On Wall Street, Amazon climbed 2.2% after it 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 8%, after reporting stronger profit than expected. It said demand from customers in the semiconductor industry continued to recover. They helped offset a 16.8% tumble for CVS Health, which reported 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.

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Starbucks dropped 15.9% 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% 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. Advanced Micro Devices dropped 9% despite reporting profit that matched expectations

(More stock market stories.)

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