Nasdaq leads U.S. stocks decline for third day as investors focus on Powell testimony

What’s driving markets?

Stocks fell Wednesday, as they dial back from levels not seen in more than a year last week, with some analysts being concerned markets may have gotten ahead of themselves.

Markets are hoping for fresh insights from Powell, who is appearing before the House Financial Services Committee on Wednesday. It will be followed by Powell’s appearance in front of the Senate Banking Committee Thursday in a semi-annual report on monetary policy. 

The Fed kept interest rates unchanged last week, but many economists think a further rate hike could be coming at the central bank’s July meeting, with two more increases penciled in for this year.

Powell, in testimony to the Congress on Wednesday, reiterated that with U.S. inflation well above target, more interest rates are likely this year, although he did not shed any new light on the timing of the moves.

“Nearly all FOMC participants expect that it will be appropriate to raise interest rates somewhat further by the end of the year,” Powell said. 

Powell said in the question-and-answer session that the Fed’s decision to skip a rate hike in June while projecting more hikes to come was “consistent.” The need for speed in raising interest rates was “very important” earlier in the process and, while it now still makes sense to move rates higher, the rises could be at a “more moderate pace” than before, Powell said.

“After the hawkish hold last week, there appears to be minimal new information for Powell to add any significant new direction on monetary policy,” said the Saxo Bank strategy team, in a note to clients.

Investors will also hear from Chicago Fed President Austan Goolsbee, who is due to speak at 12:25 p.m. Eastern.

At the same time, technical indicators are showing that the S&P 500 is in an overbought conditions after the rally to highs not seen in more than a year.

The momentum oscillator for the S&P 500 recently hit 77%, according to David Rosenberg, founder and president at Rosenberg Research & Associates. “That reflects the most overbought index since September 2022,” Rosenberg wrote Wednesday.

“Any number north of 70% is a sign of a huge overbought condition,” noted Rosenberg.

Companies in focus

• Amazon.com Inc. 
  AMZN,
  -0.80%
   fell 0.8% in morning trading, after the Federal Trade Commission said it has taken action against the ecommerce giant, alleging the company manipulated consumers into enrolling in Amazon Prime without their consent. 

• FedEx Corp.
  FDX,
  -0.76%
  dropped 1.6% Wednesday after the logistics company’s full-year profit forecast fell short of expectations.

• Tesla Inc.
  TSLA,
  -3.19%
  stock lost 3% Wednesday. The EV maker’s chief executive Elon Musk met Tuesday with India’s Prime Minister Narenda Modi, and said his company will be in India “as soon as humanly possible.”

• Nio Inc.
  NIO,
  -2.30%
  dipped 0.7% after a near 4% gain in Hong Kong as the Chinese electric-vehicle maker unveiled plans for an investment of more than $1 billion from an Abu Dhabi government-backed fund.

• The U.S.-listed shares of Advanced Health Intelligence Ltd.
  AHI,
  +163.51%
  rocketed more than 160% on heavy volume Wednesday, after the Australia-based provider of personalized health care services to smartphone users announced its first partnership with a e-script medicine management company in the Middle East.