U.S. stocks were flat on Wednesday as investors digested major technology earnings and geared up for the latest Federal Reserve policy announcement.
The S&P 500 hovered above the flatline while Nasdaq Composite traded lower by 0.3%. The Dow Jones Industrial Average shed 130 points, dragged down by a 6% drop in Amgen’s stock.
Boeing lost about 2% after posing its sixth straight quarterly loss, also weighing on the Dow.
Meanwhile, Microsoft shares dipped about 2.5% even after the company topped analyst earnings. Microsoft had its largest revenue growth since 2018, thanks in part to gains in PC sales resulting from coronavirus-driven shortages last year.
The Fed wraps up its two-day policy meeting on Wednesday. The central bank is not expected to take any action, but economists expect it to defend its policy to let inflation run hot on a temporary basis. Fed Chairman Jerome Powell will hold a press conference at 2:30 p.m. ET, 30 minutes after the decision is announced, and those comments could move markets.
“Any clues offered in the board’s statement or in the subsequent press conference about potential QE tapering — when and how fast — would likely move both the stock and bond markets,” Paulsen said.
“Many FAANGs are reporting this week and the stock market may wait until some of these key reports are out before deciding on its next major direction,” said Jim Paulsen, The Leuthold Group chief investment strategist.
On Tuesday, the major averages traded around the flatline. The Dow Jones Industrial Average rose just 3 points. The S&P 500 closed flat after notching an all-time high on Monday. The Nasdaq Composite was the relative underperformer, dipping 0.34% as Tesla fell 4.5%.
Elsewhere, President Joe Biden is set to unveil later on Wednesday a $1.8 trillion plan in new spending and tax credits geared toward helping families. The Biden administration’s new spending plan would hike the top income tax rate to 39.6% for the wealthiest Americans and raise taxes on capital gains to 39.6% for households making more than $1 million, according to senior administration officials. Stocks took a hit initially last week when reports of this tax hike began to surface.
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