Dow Jones Falls After Fed Minutes; Solar Stocks Fall; Microsoft’s $69 Bil Battle For Activision Continues

The Dow Jones Industrial Average ended a day of choppy trading with a 0.1% drop. The morning’s 0.2% uptick faded early, but the index built momentum after the Fed’s minutes release at 11 a.m. ET. It shed most of its gain at the closing.

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The Fed’s minutes on Wednesday showed that the path to higher interest rates remains intact. The latest producer price index and employment numbers showed that inflation was slowing down at a lower pace than expected. Another 75-basis-point hike in November is in the cards with a possible terminal rate of 4.6% in 2023.

Thursday’s consumer price index is on watch as well. Should it come in above expectations, bond yields could move the stock market, according to Quincy Krosby, chief global strategist at LPL Financial.

According to Fed meeting minutes released today, the Federal Reserve will aim to “calibrate the pace of further policy tightening” to lessen significant risk of its adverse effect on the economy.

The 2022 GDP will likely contract to 0.2% and will inch up to 1.2% in 2023, well below the 5.7% in 2021.

The Nasdaq composite reversed from a loss of 0.2% to notch a 0.5% gain in late trading. But it closed today’s session slightly lower. The S&P 500 also faded late and closed 0.3% lower. The small-cap Russell 2000 pared losses after it led declines by nearly 1% in the morning session. It was down 0.3% again at closing bell.

The yield on the benchmark 10-year Treasury note was unchanged at 3.9%. Crude oil fell more than 2% to $87.04 a barrel.

Outside Dow Jones: Stocks Moving Today

Solar stocks fell sharply in today’s market. Enphase (ENPH) has fallen nearly 3%. Canadian Solar (CSIQ) has plunged nearly 4%, while First Solar (FSLR) is down over 3%. First Solar is testing its 50-day moving average.

SunPower (SPWR) has gapped down 10% and fallen below its 200-day moving average. Closely associated lithium play Albemarle (ALB) has gapped down 9% and fallen below its 50-day line. The stock was added to the IBD Leaderboard watchlist this week.

EV stocks are moving in today’s market, with Chinese plays leading.

Nio (NIO) fell nearly 1%. Nio will start deliveries of three new models in Europe this weekend through a leasing plan. Elsewhere, Xpeng‘s (XPEV) EV cars are scheduled for a European launch in 2023. XPEV is up but less than 1%.

Li Auto (LI) rose more than 3%. BYD (BYDDF) fell 1%. EV leader Tesla (TSLA) added to losses. The stock is down more than 13% in the past six trading sessions. That is its longest losing streak since March 2020, according to Dow Jones Market Data.

In health care, Moderna (MRNA) has gapped up 10% in strong volume after news that Dow Jones component Merck (MRK) will help it make a personalized cancer treatment vaccine based on its messenger RNA technology. Merck is slightly lower after spiking on Tuesday on news of a successful study for its drug for a rare blood pressure condition. Merck is also in a flat base and approaching a buy point of 95.82.

Lithium and fertilizer leader Sociedad Quimica y Minera (SQM) has gapped down 7% and is testing its 50-day line.

Futures Await CPI Inflation Report; Investors Avoid This Mistake

September’s Economic Data

Wholesale prices rose more than expected in September. The 0.4% increase exceeded Econoday estimates of 0.2% and followed a decline in August of 0.2%. The yearly increase hit 8.5%, down from August’s 8.7%. Wholesale prices minus food and energy rose 5.6% over the period, unchanged from the previous month.

Microsoft (MSFT) continues its battle to get approval to acquire Activision Blizzard (ATVI). Last month, the U.K. Competition and Markets Authority sent the proposal to its second phase of probe due in January 2023. In the latest follow-up, the software and gaming giant says that the U.K. watchdog did not show the “appropriate level of critical review.”

The all-cash deal — valued at $69 billion — received approval from Brazil last week. New Zealand’s decision is due in November. Earlier, Saudi Arabia was the first country to OK the deal. Shares of both stocks are in corrections.

Earnings Deck

PepsiCo (PEP) beat views with solid revenue growth of 8.9% to $21.9 billion in the third quarter, vs. $20.1 billion in Q3 2021. Earnings per share of $1.95 grew 21% from $1.60 vs. the same period last year. Shares have risen 4% today as they rebound from an 11% decline since mid-August.

Dow Jones stock Walgreens (WBA) is on deck with earnings Thursday, along with Delta Air Lines (DAL) and Taiwan Semiconductor (TSM).

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