Stocks In The Red, Bonds On The Rise As Investors Brace for FOMC Minutes, Crucial CPI Report: What's Driving Markets Wednesday?

Risk sentiment weakened during Wednesday trading on Wall Street, following significant gains in the previous session. This shift was triggered by higher-than-expected producer inflation, reigniting concerns ahead of the crucial consumer inflation report scheduled for Thursday.

Traders were also eagerly anticipating the release of the Federal Reserve Open Market Committee meeting minutes at 2 p.m. ET, hoping for more clarity regarding the positions held by committee members.

Recent statements from Fed officials have generally hinted at a more dovish stance, suggesting a potential pause in the ongoing interest rate hike campaign. Yet Michelle Bowman‘s remarks on Wednesday hinted at the possibility of additional rate hikes to combat inflation.

In the Middle East, the geopolitical landscape has grown increasingly complex, with Israel making preparations for a siege of Gaza, while Iran, Lebanon and Syria have condemned the actions of the Israeli Defense Forces.

The bond market experienced a rally following weeks of rising yields. The 10-year Treasury, as tracked by the US Treasury Note ETF UTEN, rose by 0.6% during the session, as yields saw a 7-basis point drop to 4.58%. The 30-year Treasury, closely monitored through the iShares 20+ Year Treasury ETF TLT, surged by 1.8% in the session, resulting in a 10-basis point decrease in yields to 4.73%.

Cues From Wednesday’s Trading:

The S&P 500 eased 0.1%, after a 0.5% rise on Tuesday. A similar performance was observed by the Dow Jones Industrial Average, while tech stocks in the Nasdaq 100 saw gains, rising 0.2% on the day.

Small caps in the Russell 2000 fell 0.6%.

Wednesday Trading In Major US Equity ETFs

• The SPDR S&P 500 ETF Trust SPY was 0.1% lower to $434.23.
• The SPDR Dow Jones Industrial Average ETF DIA fell 0.2% to $336.96.
• The Invesco QQQ Trust QQQ fell 0.3% to $369.47, according to Benzinga Pro data.

Looking at S&P 500 sector ETFs:

• The Energy Select Sector SPDR Fund XLE was the laggard for the second day in a row, down 1.7%.
• The Real Estate Select Sector SPDR Fund XLRE outperformed up 1%.

Stocks In Focus:

• Novo Nordisk A/S NVO rose over 6% after the Danish biotech said it decided to stop a trial that evaluated the efficacy of semaglutide for renal impairment in people with type 2 diabetes and chronic kidney disease. The decision followed a recommendation from an independent Data Monitoring Committee, which concluded that the results from an interim analysis met certain pre-specified criteria for stopping the trial early for efficacy.
• The Novo Nordisk news sent shares of kidney dialysis company DaVita, Inc. DVA down by about 20%.
• Eli Lilly and Company LLY rose over 3%, hitting fresh all-time highs.
• Exxon Mobil Corp. XOM fell over 4% after revealing a nearly $60-billion acquisition deal with Pioneer Natural Resources, marking the largest oil and gas acquisition in 20 years.
• German shoemaker Birkenstock BIRK could also be in focus as its shares debut on the NYSE. The company priced the initial public offering at $46 per share, the Wall Street Journal reported.

Commodities, FX, Crypto and Other Global Equity Markets:

Crude oil fell 1.4%, with a barrel of WTI-grade crude trading at $83. The United States Oil Fund ETF USO was 0.9% lower to $76.  

Gold edged 0.8% up to $1,874/oz, while silver rose 0.7% to $21.99. Bitcoin BTC/USD was 2.7% lower to $26,646.

The dollar ticked higher, with the U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF UUP, up 0.1%. The EUR/USD pair, which is tracked by the Invesco CurrecyShares Euro Currency Trust FXE, was flat at 1.0603.

European equity indices had a positive session. The SPDR DJ Euro STOXX 50 ETF  FEZ rose 0.3%. 

Staff writer Piero Cingari updated this report midday Wednesday. 

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