US Stocks Tick Higher, Dollar Falls To 1-Month Low Ahead Of Fed News: What's Driving Markets Today

The U.S. stock market ticked higher Wednesday ahead of the Federal Reserve's afternoon interest rate announcement. The FOMC is largely expected to defer tightening interest rates at this meeting, snapping a streak of 15 consecutive hikes.

Both the S&P 500 index and the tech-heavy Nasdaq 100 are on track to post their fifth straight session of gains. Wednesday also witnessed a lower-than-expected producer price inflation (PPI) print. The inflation measure fell from 2.3% in April to 1.1% in May, the lowest level since January 2020. 

Now, all eyes are on the FOMC policy statement, due at 2 p.m. ET, and Jerome Powell's press conference at 2:30 p.m. The Fed will also unveil its revised economic projections, which will give the board's assessment over interest rates, growth and inflation going forward. 

Cues From Wednesday's Trading:

The S&P 500 index moved 0.2% higher, while the Nasdaq 100 rose 0.4%, hitting levels last seen in early April 2022. 

Blue chip stocks in the Dow Jones Industrial Average eased 0.4% and the small-cap-heavy Russell 2000 fell 0.3%. 

US Index Performance Wednesday

Analyst Color:

"The resilience in the economy has been surprising – especially given the headwinds of 500 bps in tightening," said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance.

The analyst attributes the stock market's strength to the economy’s resilience.

"Eventually higher rates will take their toll on the economy and markets, but in the meantime, both are likely to persist for longer than almost anyone would have expected as recently as six months ago," he added.

Wednesday's Trading In Major US Equity ETFs: In midday trading on Thursday, the SPDR S&P 500 ETF Trust SPY was 0.3% higher to $438.08, the SPDR Dow Jones Industrial Average ETF DIA fell 0.3% to $341.55 and the Invesco QQQ Trust QQQ was 0.6% higher to $365.30, according to Benzinga Pro data.

Almost all U.S. equity sectors were positive, except for the Energy Select Sector SPDR Fund XLE and the Health Care Select Sector SPDR Fund XLV. 

The Technology Select Sector SPDR Fund XLK slightly outperformed, up 0.9%, followed by the Utilities Select Sector SPDR Fund XLU, up 0.8%.

Latest Economic Data:

The Labor Department released its producer price index report, reporting a monthly decline of 0.3% in May compared to a 0.2% increase in April. In annual terms, headline PPI fell from 2.3% to 1.1%. Core producer prices may edged up 0.2%, the same pace of increase as in the previous month. On a year-over-year basis, core producer prices came in at 2.8%, slightly lower than the expected 2.9%.

Stocks In Focus:

• Coherent Corp. COHR rose 20% on Wednesday as the optoelectronics company announced a new product that it says will serve electric vehicle applications.
• IPG Photonics Corp. IPGP rose 15% after Raymond James upgraded the company's stock from Market Perform to Outperform, raising the price target to $170.
• Humana Inc.'s HUM stock fell 14%, swept up in the downdraft generated by UnitedHealth Group Inc.'s UNH statement that its elderly clients are catching up on hip and knee procedures delayed by the COVID pandemic, raising insurance costs.
• MicroVision, Inc. MVIS fell 28% as the company said Tuesday it plans a $75-million public offering of its common shares.
• Homebuilder Lennar Corp. LEN is scheduled to release its quarterly results after the market close.

Commodities, Bonds, Other Global Equity Markets:

Crude oil held steady, with a barrel of WTI grade crude trading at $69.43. The United States Oil Fund ETF USO was 0.1% higher to $62.23 per share.  

Treasury yields slightly fell, with the 10-year yield down by 3 basis points to 3.79% and the two-year yield down by 4 basis points to 4.63%. The iShares 20+ Year Treasury Bond ETF TLT was 0.6% higher for the day. 

The dollar fell, with the U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF UUP, down 0.6%. The EUR/USD pair, which is tracked by the Invesco CurrecyShares Euro Currency Trust FXE, was 0.7% higher to 1.0860.

European equities traded higher across the board. The SPDR DJ Euro STOXX 50 Etf  FEZ rose 1.1%. 

Gold surged 0.6% to $1,955/oz. The SPDR Gold Trust GLD was 0.6% higher to $182. Silver rose 1.8% to $24, with the iShares Silver Trust SLV up 1.6% to $22. Bitcoin BTC/USD was flat at $25,927.

Staff writer Piero Cingari updated this report midday Wednesday. 

Photo via Shutterstock.