Stocks drifted lower in the wake of the Federal Reserve’s latest policy announcement, shrugging off the positive vibes from the strong earnings report from Apple Inc. (NASDAQ:AAPL) after the close on Tuesday and a 4.4% gain during the cash session.
The Dow Jones Industrial Average and the S&P 500 both lost 0.7%. The Nasdaq Composite fell 0.4%. The Russell 2000 bucked the trend to finish with a 0.3% gain.
The Fed, as expected, left interest rated unchanged at a range of 1.5% to 1.75%, but added language acknowledging the recent rise in inflation pressure, which lays the groundwork for another rate hike (the second of the year) in June.
Despite the addition of verbiage saying the Fed would treat its 2% inflation target as symmetrical (in that they would allow an overshoot for a time, winking at a status quo pace of rate hikes) the market interpreted the statement as carrying a hawkish bias pushing the dollar higher and stocks lower.
Currently, the futures market assigns 50-50 odds of four quarter-point rate hikes before the end of the year.
At the industry level, 10 out of 11 groups finished in the red, with consumer staples and telecom leading the way down with losses of 1.9% and 1.8% respectively. Gilead Sciences, Inc. (NASDAQ:GILD) fell 7.8% after reporting weaker-than-expected earnings and revenues for the first quarter. CVS Health Corp (NYSE:CVS) fell 3% despite beating estimates and issuing upbeat guidance.
Looking ahead, earnings season will remain busy with the likes of GoPro Inc (NASDAQ:GPRO) and Xerox Corp (NYSE:XRX) reporting Thursday. Friday will feature the release of the April jobs report. Analysts are looking for payrolls to jump 190,000 with the unemployment rate falling to 4%.
Check out Serge Berger’s Trade of the Day for May 3.
Today’s Trading Landscape
To see a list of the companies reporting earnings today, click here.
For a list of this week’s economic reports due out, click here.
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Anthony Mirhaydari is founder of the Edge (ETFs) and Edge Pro (Options) investment advisory newsletters. Free two- and four-week trial offers have been extended to InvestorPlace readers.
