The S&P 500 posted a modest gain on Wednesday. Traders assessed the potential for future Federal Reserve rate cuts amid persistent inflationary pressures. The broad market index added 0.16%, closing at 5,918.25.
The NASDAQ Composite slipped 0.06% to 19,478.88. The Dow Jones Industrial Average outperformed, rising 106.84 points, or 0.25%, to end at 42,635.20. The three major averages are on pace for a second straight weekly loss.
Minutes released from the Federal Reserve’s recent meeting reflected that nearly all committee participants found that upside risks to the inflation outlook had increased. This added to investors’ concerns that there may be fewer rate cuts than expected this year. “In discussing the outlook for monetary policy, participants indicated that the Committee was at or near the point at which it would be appropriate to slow the pace of policy easing,” the minutes read.
Bond yields, which have been climbing on bets that President-elect Donald Trump’s tariff and tax plans could lead to a spike in inflation, wavered throughout Wednesday’s trading session. The rate on the benchmark 10-year Treasury at one point topped 4.7%, nearing levels last seen in late April. Investors are now awaiting Friday’s December payrolls report.
“Forecasters find it increasingly difficult to model out the path for interest rates, growth, and inflation because of the uncertainty surrounding Trump policies still being developed,” Jeffrey Roach, chief economist for LPL Financial, said. “Markets could get choppy if there is a surprise in Friday’s payroll release.”
The recent pullback in shares of Coca-Cola has presented an attractive buying opportunity, according to TD Cowen. Shares rose about 1.1% on Wednesday after analyst Robert Moskow upgraded the stock and reiterated his $75 price target, suggesting more than 20% upside ahead.
According to Moskow, Coca-Cola has room to capitalize on the growth of per capita beverage consumption in international markets over the long term.
Fed discussions impact market dynamics
“KO continues to execute at the top of its game through successful refranchising internationally and outstanding execution domestically,” he said in a note to clients Wednesday.
“We view the stock’s recent pullback as an overreaction.” The beverage giant’s stock has lost about 12% in the last three months. Concentration is a key risk to start 2025, with much of the market’s gains dependent on the performance of a handful of mega-cap tech companies, Venu Krishna, head of U.S. equity strategy at Barclays, wrote on Wednesday. “The percentage of SPX constituents beating the index rose to the highest level in over a year by October, but fell sharply over the final 2 months of 2024,” Krishna wrote.
“Big Tech is now 29.3% of the S&P 500 by weight and accounted for half of the index’s gains last year.”
Quantum computing stocks tanked after Nvidia CEO Jensen Huang said Tuesday during the company’s analyst day that useful quantum computers are likely two decades away. “If you said 15 years for very useful quantum computers, that would probably be on the early side,” he said. “If you said 30, it’s probably on the late side.
But if you picked 20, I think a whole bunch of us would believe it.”
Shares of major quantum computing companies like IonQ and Rigetti Computing dropped significantly following Huang’s comments. Shares of Edison International were down by more than 12.5% as thousands flee the Los Angeles area due to wildfires destroying homes and infrastructure. This decline put the California-based utility on track for its worst trading day since March 2020.
Constellation shares tumbled more than 5% in Wednesday afternoon trading on a report that the power company is nearing a deal to acquire Calpine Corp. for $30 billion including debt. Constellation is the largest operator of nuclear plants in the U.S., while Calpine operates natural gas and geothermal plants.
The company has garnered significant attention from investors as it is expected to play a key role in the data center boom. Constellation, for instance, announced last September that it plans to restart the Three Mile Island nuclear plant through a power purchase agreement with Microsoft. Check out the stocks making big moves in midday trading:
– EBay – Shares jumped 9.7% and touched 52-week highs after the company announced a strategic partnership with Facebook, redirecting buyers to eBay to complete transactions.
