Fed Fatigue Weighs on Wall Street

The Federal Reserve's interest rate hike was in focus

Deputy Editor
May 5, 2023 at 1:33 PM
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After Wall Street got off to a rocky start, the U.S. Federal Reserve's two-day policy meeting and surrounding storylines moved in as this week's investor focus. As expected, the central bank issued its 10th-straight interest rate hike on Wednesday, which reignited fears in the banking sector and helped the Dow Jones Industrial Average (DJI), S&P 500 Index (SPX), and Nasdaq Composite (IXIC) all lock in their fourth-straight loss. Despite a red-hot Friday session all three bourses are set to mark a weekly loss

Biggest Quarterly Reports to Unpack

Investors had plenty of earnings reports to unpack. Starbucks (SBUX) suffered a post-earnings slide after maintaining a conservative 2023 forecast. E-commerce concern Shopify (SHOP), meanwhile, soared to 12-month highs after earnings and announcing a big sale to Flexport. Elsewhere, DraftKings (DKNG) and DoorDash (DASH) moved in separate directions after the respective reports.

After Bed Bath & Beyond crumbled, retail traders took renewed interest in popular meme stock AMC Entertainment (AMC) before earnings. Paramount Global (PARA) noted slower-than-expected subscriber growth for its flagship streaming service, while Peloton's (PTON) upbeat results couldn't overcome a big quarterly miss. Finally, SoFi Technologies (SOFI) notched its first-ever negative post-earnings close.

Stocks to Watch This Month

Our list of the best and worst stocks to own in May is out, and among that list are two notable video game stocks. Off the list but still worth mentioning, United Airlines (UAL), Marathon Petroleum (MARA), and Sea (SE) all just pulled back near historically bullish moving averages that help the equities move higher over the next month. MGM Resorts (MGM) also dipped towards a familiar springboard, but is being held back by a negative post-earnings response.

Key Inflation Data on Tap Next Week

Following the Fed's interest rate hike, investors will be on the lookout for next week's inflation data, and a deluge of earnings reports are due. In the meantime, Schaeffer's Senior Quantitative Analyst Rocky White highlights the implications of small-cap underperformance, and why Schaeffer's Senior V.P. of Research Todd Salamone thinks bulls should strike now.

 

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