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Stocks rise after Fed signals further rate hikes, Dow jumps nearly 200 points

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The S&P 500 was flat on Wednesday as traders awaited the Federal Reserve’s release of its policy meeting from earlier this month.

The market was split as the broad market index hovered around the flat line while the Dow Jones Industrial Average slipped by 84 points, or 0.3%, after being the only one of the major averages to finish higher in the previous session, albeit slightly. Meanwhile, the Nasdaq Composite advanced 0.4%, after posting a steep loss in the previous session.

Investors are awaiting the latest meeting minutes from the Federal Open Market Committee, which are scheduled to be released at 2 p.m. ET. At the May 4 meeting, the Fed hiked rates by half a percentage point, with Chair Jerome Powell saying that inflation is “much too high and we understand the hardship it is causing. We’re moving expeditiously to bring it back down.”

“The Fed is committed to a near-term rate and quantitative tightening path, with a goal to soften demand and moderate inflation without inducing a recession,” said Ross Mayfield, investment strategy analyst at Baird. “With market devoid of major catalysts, earnings reports and macro takeaways remain in focus, particularly retailers, which have sold off precipitously on cracks in consumer demand and rapid spending mix shift.”

Nordstrom shares jumped more than 12% Wednesday after the retailer surpassed sales expectations and raised its full-year outlook. Dick’s Sporting Goods gained 11% after topping earnings and revenue estimates for its fiscal first quarter.

Best Buy climbed 6% despite getting a downgrade from Barclays, which followed a mixed earnings report Tuesday in which the electronics retailer cut its yearly outlook.

Retailer names led the market higher after it opened in the red, following a report that bidders are still competing to acquire Kohl’s. The SPDR S&P Retail ETF gained 6%.

Retailers have been on an earnings spree since last week that has held the attention of investors anxious to see how companies are managing sky-high inflation. Investors and analysts have pointed out that what has so far been a retail wreck reflects a shift in consumers’ demand for services rather than goods, and some have suggested stocks may be getting overly punished for their results.

“I know everybody’s focused on Walmart and Target,” which spooked investors when they plummeted on weak results last week, “but let’s focus on something like TJX that actually delivered and raised their margin guidance,” Hightower Advisors chief investment strategist Stephanie Link said Wednesday on CNBC’s “Squawk Box.”

“Services and high end are actually still doing pretty good,” she added, noting Ralph Lauren’s top- and bottom-line beats and positive performance in Nordstrom’s designer and shoe business that “helped comps because people wanted to buy things for occasions.”

Elsewhere, Intuit jumped more than 7% after the tax software company reported better-than-expected quarterly profit and revenue, and raised its current quarter outlook. Tech stocks led market losses in the previous session, following a warning of slowing growth from social media company Snap.

Homebuilder Toll Brothers also posted quarterly results that beat analyst expectations, sending the stock up more than 3%. Lennar, D.R. Horton and Pultegroup were also among the S&P 500’s top gainers Wednesday.

Traders will continue to parse through earnings reports this week to see how companies are handling inflationary pressures. Snowflake and Nvidia are set to post quarterly reports after the bell. Costco will report on Thursday.

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