S&P 500 falls as traders await Fed decision, digest Big Tech earnings: Live updates

Barclays is bracing for an in-line quarter from Apple when it reports results next week and a potential downtick in guidance for the September period due to iPhone 15 delays.

According to the Wall Street firm’s checks in Asia, production is currently 3 to 4 weeks behind schedule. This is due to issues related to titanium alloy frame casing, image sensors and a handful of other components, wrote analyst Tim Long.

He noted that 2 million to 3 million units shifting to the December quarter means the company would miss the 50 million units expected by Wall Street.

“Sep-Q looks to be at risk due to IP15 delay and some units shifting to Dec-Q,” Long wrote. “We expect Sep-Q guide could miss Street estimates, but it’s not clear that it matters for the stock as bulls may expect a stronger Dec-Q.

Better services revenue should counteract weakness within the company’s hardware segment during the June quarter, he added.

— Samantha Subin

All 11 sectors of the S&P 500 are on pace to post monthly gains with just three full trading sessions left in July.

Energy and financial stocks have led the sectors higher, with each up more than 5% on the month. Consumer discretionary and information technology have seen the most restricted gains in July, as both have gained less than 1% month to date.

By comparison, the broad index has advanced 2.4% since the month began.

— Alex Harring

Second-quarter earnings reports and a merger announcement were driving big stock movers on Wednesday.

Microsoft — The software giant and Xbox owner saw its shares slide 4% after issuing quarterly revenue guidance that fell short of analysts’ expectations.

Alphabet — Shares of the Google parent rose more than 6% after Alphabet beat analysts’ revenue and profit in the second quarter. 

PacWest – Shares of the community bank surged more than 27% after it agreed to be acquired by Banc of California in all-stock deal, which includes $400 million in equity from Warburg Pincus and Centerbridge.

Check out more movers here.

— Jesse Pound

With the markets largely expecting a 25 basis points rate increase at the Federal Reserve’s July meeting, the decision will likely not have much of an impact on the U.S. Dollar, according to Bank of America.

“The USD has already depreciated notably coming into the meeting on back of the highly publicized soft June CPI report and first downside miss in NFP in 15 months,” Mark Cabana, the head of U.S. rates strategy at the firm’s global research division, wrote in a Tuesday note.

“That said, overall US economic data across the spectrum has generally remained resilient. This- along with some dovish signals related to the ECB and BOJ- has contributed to the USD’s partial retracement over the past week,” Cabana added.

Upcoming announcements from the European Central Bank and the Bank of Japan will likely be larger foreign exchange market drivers, he added.

“A surprise tweak to [the yield control curve] by the BOJ would likely see USD/JPY trade lower temporarily, and policy guidance beyond the fully priced 25bp ECB hike for June poses 2-way risk for the EUR,” said Cabana.

— Hakyung Kim

Shares of MicroStrategy have more than tripled this year, and the bitcoin-linked tech company is winning over some Wall Street analysts.

T.D. Cowen analyst Lance Vitanza initiated coverage of MicroStrategy, which has bought billions of dollars worth of bitcoin, at outperform. Vitanza said in a note to clients on Wednesday that the stock was the “best way for institutions to acquire exposure to bitcoin.”

The stock was higher by 1.1% in midday trading.

If you use Citi’s standard discounted cash flow valuation model, it would generate a value of $469 for Eli Lilly shares, analyst Andrew Baum says. But he doesn’t think that jibes with what could be ahead for the stock based on its expected near-term earnings momentum. So the analyst said he’s cautiously raising his price target to $525 — 14% above where shares closed Tuesday.

The higher valuation is supported by Lilly’s “significantly higher” five-year compound annual growth rate versus its peers, he said.

Lilly shares have already climbed nearly 36% over the past year amid excitement for Mounjaro, a GLP-1 medication that is expected to be approved as a weight loss treatment later this year. The drug is currently in demand to treat type 2 diabetes.

Lilly is scheduled to report its second-quarter results on Aug. 8.

—Christina Cheddar Berk

RBC Capital Markets’ Lori Calvasina noted that the earnings season thus far has been somewhat lackluster, which could spell trouble for the market as it tries to build on this year’s strong gains.

“Beats have been a little harder to come by. The percent of companies beating consensus on EPS is tracking lower in 2Q23 than 1Q23 for the S&P 500,” Calvasina, the bank’s head of U.S. equity strategy wrote in a note. “2023 EPS forecasts for the S&P 500 are slipping. The bottom-up consensus forecast for the S&P 500 is still tracking at around $219, but the anticipated growth rate has cooled a bit for the full year.”

“There will be a lot to digest from both this week and next week, and the story of 2Q23 still has plenty of opportunity to evolve,” Calvasina added. “But for now the softer earnings backdrop adds to our concern that the intermediate term path for the US equity market may be a little bumpier. On the positive side, investors are finding a rationale to shift leadership from Growth to Value.”

— Fred Imbert, Michael Bloom

Alphabet and Boeing were among the 23 names in the S&P 500 reaching fresh highs Wednesday. Both stocks climbed more than 5% in midday trading after their recent earnings beats.

In leisure and hospitality, casino stocks Caesars Entertainment and MGM Resorts also reached new 52-week highs, last higher by 1.2% and 0.7%, respectively. Hotel stock Marriott International also traded at all-time highs going back to its spinoff from Marriott Corp. in 1993.

Here are some of the names:

— Sarah Min, Chris Hayes

The Federal Reserve is widely anticipated to hike rates by 25 basis points Wednesday, after which many market participants expect the central bank could be done. However, some say there’s a strong chance for more rate hikes in the future.

“We think that they will probably go another 25 after this regardless of what the market thinks and what they say,” said Thomas Martin, senior portfolio manager at Globalt Investments. “And we also think that they’ll continue to hold those rates.”

In spite of recent indicators showing cooling inflation, the portfolio manager cited the continued strength in the labor market, as well as rising commodities prices.

— Sarah Min

The Dow Jones Industrial Average is gunning Wednesday to extend its recent advance to 13 straight days, a feat that hasn’t been done in 36 years, since January 20, 1987 — when Ronald Reagan still had another two years to serve as president.

And if, by chance, the Dow rises on Thursday too, scoring a 14-day rally, it will match a record last set on June 14, 1897, one year after Charles Dow created what was then an average of just 12 stocks in May, 1896.

The DJIA was expanded to 30 stocks in 1928.

— Scott Schnipper, Gina Francolla

Investors sound worried about Netflix after last week’s earnings report showed softer-than-expected revenue, according to Needham analyst Laura Martin.

“Since reporting earnings last week, our incoming call volume regarding NFLX has shifted decidedly more bearish,” Martin said in a note to clients.

The concerns raised by clients include whether revenue per user metrics will struggle to rebound and whether the big shifts in 2023, like paid sharing, will lead to sluggish growth in 2024.

Shares of Netflix are down more than 10% since its quarterly report on July 19.

Communications services stocks outpaced the S&P 500 Wednesday, with the sector up by more than 2% in midday trading.

The sector was buoyed by advancers such as Google-parent Alphabet, which rose more than 5% following better-than-expected results in its most recent quarter.

— Sarah Min

Union Pacific was the No. 1 stock in the S&P 500 Wednesday. The stock climbed more than 11% after the railroad operator announced a new CEO and changes to its board, even as it missed revenue expectations in its most recent quarter.

Union Pacific appointed Jim Vena as chief executive, a move that will be effective August 14. Vena previously served as the company’s chief operating officer from 2019 to 2020.

The stock gain also comes in spite of a revenue miss. The railroad operator posted second-quarter revenue of $5.96 billion, lower than the consensus estimate of $6.09 billion, according to FactSet.

The second-best performing stock in the broader index was KeyCorp, up more than 6%.

Bitcoin has been holding at low levels after suffering a sharp drop at the start of the week, as investors await a major Federal Reserve policy decision at the conclusion of its meeting later in the day – with most expecting another 25 basis point rate hike.

On Wednesday morning, bitcoin traded just above the flat line at $9,258.00, according to Coin Metrics. Despite a recent rally driven by various institutions’ applications for bitcoin ETFs, bitcoin’s price has been stuck, held back by regulatory uncertainty. It’s down about 2% for the week so far and 3% for the month.

Rate increases helped pull bitcoin’s price lower throughout 2022, which was already filled with several negative catalysts for the industry. Despite the recent resilience in bitcoin and rally in equities, recession concerns remain as traders weigh the lagged effect of rate hikes and recent signals of slowing in the economy.

“Prices could also be jumpy throughout this week,” said Callie Cox, analyst at investing firm eToro. “We’re facing some big tests for both stocks and Bitcoin with the Fed meeting, earnings, and a critical inflation report coming out. It’s an especially important week given the drivers of the rally recently. Investors are starting to believe in a soft landing, even though some metrics have yet to confirm it.”

— Tanaya Macheel

New home sales declined in June, coming in below even muted market expectations.

Sales of new single-family homes totaled 697,000, below the Dow Jones estimate for 725,000. The 2.5% drop from May’s total actually was better than the expected 5% slide, but only because May’s total was revised down sharply to 715,000.

Even with the drop, the June total was still 23.8% above the same period in 2022.

The median new home price was $415,000, while supply was at 7.4 months, up 0.2 percentage point from May.

—Jeff Cox

Raymond James downgraded shares of Target to market perform from strong buy. Still, the stock was up slightly on Wednesday.

The firm cited concerns on decreasing topline momentum and other concerns on near-term trends.

“We believe sales trends slowed for TGT in late May and this pressure continued, potentially driving a comp sales miss versus consensus. … The weakness in discretionary spending could persist into 2024, leading us to take a more cautious view with our sales and margin estimates,” analyst Bobby Griffin wrote in a Wednesday client note.

The company is set to report earnings on August 16.

The major averages opened lower Wednesday.

The Dow Jones Industrial Average fell 8 points, or 0.03%. The S&P 500 slid by 0.18%, and the Nasdaq Composite declined 0.32%.

— Sarah Min

With an interest rate hike Wednesday all but a done deal, investors will be looking to guidance from the Federal Reserve on whether this might be the last of this cycle.

The rate-setting Federal Open Market Committee will release its decision at 2 p.m. ET, followed a half-hour later by Chairman Jerome Powell’s news conference.

Traders are pricing in a 100% chance of an increase, but just a 38% probability that the Fed will follow through with another hike before the end of the year, according to CME Group data.

“The signal will probably be, yes, we’re hiking, but then we think we can sit here for a while and see,” said Kathy Jones, chief fixed income strategist at Charles Schwab. “But no promises. They can’t give up the option.”

—Jeff Cox

Gold is inflecting again to reach its highest point since last week. On Wednesday morning, it hit a high of 1,975.5. On July 21, gold touched a high of 1,975.9.

Gold miners are also up in the premarket, on pace for a second straight up day. Shares of New Gold were up by 1.6%, while Coeur Mining was higher by 1.55%.

— Sarah Min, Gina Francolla

“Holding a solid leadership position ahead of a large AI-driven tech cycle, Microsoft stands well positioned for durable double-digit EPS growth over multiple years,” Morgan Stanley analyst Keith Weiss wrote on Wednesday.

Microsoft shares were lower by more than 3% in premarket trading.

CNBC Pro subscribers can read the full story here.

— Brian Evans

Major analysts on Wall Street are lauding Alphabet’s recent earnings beat.

Analysts were quick to highlight growth in both artificial intelligence integration as well as Google’s cloud segment. The stock rose 6% in premarket trading.

“While questions will remain about AI’s impact on core products (e.g. if such a shift can be disruptive over the short-term) or costs structure (e.g. if computing costs per search will rise), we see Alphabet as the leader in compounded AI investment in the past 5-6 years and well positioned to capitalize on this trend in the coming decade,” Goldman Sachs analyst Eric Sheridan said.

CNBC Pro subscribers can read the full story here.

— Brian Evans

These are the stocks making the biggest moves before the bell:

• Alphabet — The Google parent popped more than 6% after topping Wall Street’s second-quarter earnings expectations, fueled by growth in its cloud-computing segment. The company also announced that its chief financial officer, Ruth Porat, would step into a new role as president and chief investment officer.
• Microsoft — The software giant lost about 4% after reporting slowing revenue growth within its cloud business during its fiscal fourth quarter and called for lower-than-expected guidance. Microsoft, however, did beat Wall Street’s estimates, reporting earnings of $2.69 per share on $56.19 billion in revenue. Analysts polled by Refinitiv anticipated earnings per share of $2.55 on revenue of $55.47 billion.
• PacWest — Shares of the regional bank stock jumped more than 28% on news that it will be acquired by Banc of California to create a new firm called Pacific Western. Banc of California shares added about 6%.

Read the full list of stocks moving before the bell here.

— Samantha Subin

Morgan Stanley upgraded shares of WW International Wednesday after a key acquisition, which the firm says will help the company gain exposure to weight loss drugs.

“We believe Sequence share gains can continue as WW ramps its integration plans and markets to the estimated ~6M current and lapsed WW subscribers that qualify for GLP-1s,” analyst Lauren Schenk said.

WW International stock jumped more than 7% in premarket trading.

CNBC Pro subscribers can read the full story here.

— Brian Evans

Boeing popped 4% in the premarket. The aircraft company reported second-quarter results that topped analyst expectations following a pickup in commercial aircraft deliveries.

Here’s how Boeing performed during the period ended June 30, compared with Refinitiv consensus estimates

• Adjusted loss per share: 82 cents vs. 88 cents.
• Revenue: $19.75 billion vs. $18.45 billion

Boeing and main rival Airbus have both struggled to increase aircraft production in the wake of the pandemic as some airlines face longer waits for new jets, just as travel demand rebounds.

— Leslie Josephs, Sarah Min

Coca-Cola shares rose nearly 2% in premarket trading Wednesday. The moves come after the beverage company raised its full-year outlook and topped earnings and revenue estimates.

Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

• Earnings per share: 78 cents adjusted vs. 72 cents expected
• Revenue: $11.97 billion adjusted vs. $11.75 billion expected

— Sarah Min, Amelia Lucas

U.S. Treasury yields fell Wednesday as investors awaited the latest interest rate decision and monetary policy guidance from the Federal Reserve. Markets are widely expecting the central bank to hike interest rates by 25 basis points as part of its continued efforts to ease inflation and cool the economy.

At 4:23 a.m. ET, the 10-year Treasury yield was close to three basis points lower at 3.8826%. The 2-year Treasury was at 4.8599% after falling by more than three basis points.

Singapore’s manufacturing output fell 4.9% year on year in May, a shallower drop than the 6.8% expected in a Reuters poll.

Excluding the typically volatile biomedical manufacturing sector, output fell 5.2% year-on-year.

The 4.9% figure is a rebound from the revised figure of a 10.5% drop seen in May, which was Singapore’s steepest fall in manufacturing output in about 10 years.

On a seasonally adjusted month-on-month basis, manufacturing output increased 5% compared to May. Excluding biomedical manufacturing, output increased 6.6%.

— Lim Hui Jie

Australia’s consumer price index grew 6% year on year in the second quarter, down from the 7% recorded in the first quarter.

This also marks the second straight quarter that the inflation rate has slowed from the 33 year high of 7.8% seen in the fourth quarter of 2022.

The country’s statistics bureau said that prices of insurance and financial services, food and recreation and culture activities saw the largest increase in the second quarter.

Trimmed mean inflation, which the Reserve Bank of Australia watches as a measure of underlying inflation, came in at 5.9% in the second quarter, down from 6.6% in the first quarter.

The “trimmed mean inflation” is the weighted mean of the central 70% of the quarterly price change distribution of all CPI components.

— Lim Hui Jie

Shares of South Korean chipmaker SK Hynix gained 0.71% after it posted a quarterly operating loss of 2.9 trillion Korean won ($2.28 billion) for the second quarter of 2023.

This was a reversal from a 4.2 trillion won operating profit recorded in the same period a year ago, but lower than the 3.4 trillion operating loss seen in the first quarter.

Hpwever, the figure was slightly deeper than the Refinitiv SmartEstimate forecast of 2.7 trillion won, and the third straight quarter of losses for the company. The estimate is weighted toward analysts who are more consistently accurate.

SK Hynix’s revenue fell 47% on year to 7.31 trillion won, but compared to last quarter, revenue rose 44% from 5.08 trillion won.

— Lim Hui Jie

Investors will closely watch the Federal Reserve on Wednesday for its interest rate policy decision and subsequent press conference. But that doesn’t mean corporate earnings season will take a pause.

Coca-Cola, Stellantis, Boeing and AT&T are among companies expected to report before the bell on Wednesday. Meta, Chipotle and Mattel are all slated to release results after the market closes.

— Alex Harring

CoStar Group tumbled more than 5% in extended trading after the company posted its second-quarter results.

The real estate data firm reported revenue of $605.9 million, compared to the $607.3 million anticipated by analysts polled by FactSet. Third-quarter guidance on revenue came in short of expectations, with CoStar calling for a range of $622 million to $627 million, while analysts predicted $632.4 million.

CoStar Group is a member of the Nasdaq 100, so its decline – especially alongside tech names such as Microsoft and Texas Instruments – contributed to the decline in futures tied to the index.

— Darla Mercado

The Dow eked out a gain of just under 0.1% in Tuesday’s session.

With the advance, the index clinched its 12th straight winning session. A streak of that length hasn’t been seen since February 2017.

Read more about what drove the market on Tuesday.

— Alex Harring

Stock futures were mixed shortly after 6 p.m. ET.

Futures tied to the Nasdaq 100 and S&P 500 rose 0.3% and 0.2%, respectively. But Dow futures slid about 0.1%.

— Alex Harring