Dow falls 350 points ahead of Fed’s policy decision

What’s driving markets?

The Nasdaq index rose 10.7% in January performance since 2001, while the S&P 500 was up 6.2%, marking its best start to a year since 2019, according to Dow Jones Market Data.

Read: Tech stocks just had their best January in decades — here’s why that may not be a good sign

But the jitters that marked the start of the week were back Wednesday, with stocks lower ahead of the Fed decision, expected at 2 p.m. Eastern, followed by a news conference with Chair Jerome Powell at 2:30 p.m.

Most market watchers are forecasting a 25-basis point interest rate increase from the Fed. Even more attention will be focused on any commentary from Powell that pushes back against expectations the central has reached peak policy rates, and will start to lower them by year end.

Powell is expected to reiterate the Fed’s determination to keep fighting inflation, noted Randy Frederick, managing director of trading and derivatives at Schwab Center for Financial Research. “Unfortunately, even as we expected that, the market has an likelihood to sell off, even when he does finally say those words,” said Frederick.

Read: ‘Joy of missing out’: Here’s the silver lining after 2022’s stock-market ‘nightmare,’ says GMO’s Ben Inker

In U.S. economic data on Wednesday, the ISM, or Institute for Supply Management said its January manufacturing sector activity index fell to 47.4% in January from 48.4% in the prior month.

The ISM manufacturing index stood “just moderately below 50. Frankly, that’s kind of in line with what the Feds been trying to engineer all wrong, which is a slight slowdown in the economy without major recession coming into play,” said Frederick.

U.S. job openings rose to 11 million in December from 10.4 million. The number of U.S. workers quitting in December dipped to 4.09 million from 4.1 million in the prior month.

ADP said the private sector added 106,000 jobs in January. It is a significant drop from the revised 253,000 jobs added in December. Economists forecasted an increase of 190,000.

Investors will get two more big central bank decisions this week, from the European Central Bank and Bank of England, both expected to hike another 50 basis points on Thursday. Fresh data showed eurozone inflation for January coming in lower than expected on Wednesday, at a rise of 8.5%, the lowest since May.

And corporate earnings news will continue to roll in, with Facebook parent Meta Platforms Inc.
META,
-0.24%
due to report after the bell.

Companies in focus

• Advanced Micro Devices
  AMD,
  +7.64%
  shares jumped 6.6% Wednesday after the chip maker’s data-center sales rose and executives predicted sales of more than $5 billion to start 2023.

• Snapchat parent Snap Inc.
  SNAP,
  -13.45%
  slid 14% Wednesday after the social-media group posted another bleak quarter and offered no guidance.

• Electronic Arts Inc.
  EA,
  -11.30%
  stock fell 12% after the gaming company delivered a downbeat forecast and shelved mobile versions of two popular games.

• Peloton Interactive Inc.
  PTON,
  +19.10%
  shares went up 18.7% Wednesday after the company posted a $335.4 million loss Wednesdays for its latest quarter. Still it indicated improvement from the connected-fitness company’s cash-burning peaks.

• Match Group Inc.
  MTCH,
  -7.95%
  shares plunged 7.5% after the online-dating company met revenue expectations for its latest quarter but fell short with its first-quarter outlook, while saying that at least the first half of the year could remain “challenging.”

• Mondelez International Inc.
  MDLZ,
  +1.21%,
  parent company of Chips Ahoy cookie-maker Nabisco, saw its shares up 1% Wednesday after the company on Tuesday reported growth across the board for the fourth quarter and full year, beating Wall Street expectations.

• Amgen Inc.
  AMGN,
  -3.58%
  topped Wall Street expectations for its fourth quarter, but the drug maker’s shares fell Wednesday as its 2023 guidance fell on the lower end of Wall Street’s expectations.

• Splunk Inc.
  SPLK,
  +1.25%
  shares went up 0.3% after the company said it intends to lay off about 4% of its staff as cutbacks in the software industry intensify.

• Humana Inc. 
  HUM,
  +0.77%
   shares rose 1.1% after the company reported Wednesday fourth-quarter profit that beat expectations but revenue that came up a bit shy, while predicting “robust” Medicare Advantage membership growth in 2023. 

• T-Mobile
  TMUS,
  +0.50%
  shares edged up 0.6% after the company said it expects continued strong growth in its customer base this year, though not as robust as what was seen in 2022.