Stock Market Slides Amid Fed Worries; This Former Pandemic Winner Plummets 33%

The stock market seemed unsure about how to follow up Monday’s bullish reversal, and were mixed in the first hour of trading.

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The Nasdaq composite reversed lower 0.3% after rising 0.5%. The S&P 500 and Dow Jones Industrial Average were both higher, with the S&P up 0.3%. Volume fell on the NYSE and Nasdaq compared with the same time on Monday.

Financial and energy sectors — influenced by bond and oil prices, respectively — led the stock market higher. Financial Select Sector SPDR (XLF) and Energy Select Sector SPDR (XLE) rose 0.9%.

The price of U.S. crude oil eased 0.6% to $104.61 a barrel, while the 10-year Treasury yield fell 6 basis points to 2.93%.

Stock Market Bracing For Fed Decision

Investors may be guarded today as the Federal Reserve starts a two-day meeting. While most investors, analysts and economists expect a half-point rate increase, the larger question is the Fed’s plans for its balance sheet.

Fed officials have suggested the central bank will shed $95 billion each month by letting bonds expire, which is another form of monetary tightening. The Fed’s statement comes out at 2 p.m. ET Wednesday.

Fertilizer stocks, some of the market’s best performing during its correction, were mixed after first-quarter results.

Mosaic (MOS) reversed from early losses after sales came in below estimates, and traded up more than 3%. Mosaic sees supply-chain problems extending into Q2. Nutrien (NTR) missed the consensus earnings estimate, but raised its full-year profit forecast. The stock rose nearly 4% and is finding support at the 10-week moving average.

FMC (FMC) plunged after the fertilizer company beat earnings expectations but trimmed guidance. The stock slid below its 50-day moving average in heavy volume, in what appears to be a sell signal.

Monolithic, Hilton, Chegg Big Movers

In other earnings moves, Monolithic Power Systems (MPWR) jumped more than 7% and regained the 50-day line. The maker of chips for power management late Monday topped Q1 estimates and gave bullish guidance for the current quarter.

Hilton Worldwide (HLT) beat first-quarter earnings estimates before Tuesday’s open but revenue and earnings guidance missed expectations. Earnings soared to 71 cents from 2 cents a year ago. Revenue surged 97% to $1.72 billion. Shares sold off nearly 5% and are now just below the 50-day line. So far there’s no sell signal.

Chegg (CHGG) collapsed 33% to the lowest price in more than four years. The provider of education services beat Q1 estimates, but slashed its forecast for operating profit. The company fears that rising inflation and lagging wage growth will cut class enrollment. Chegg was one of the winners of the pandemic economy as a facilitator of online learning during lockdowns. But the stock is down 86% from its February 2021 peak.

Arista Networks (ANET) fell below its 200-day moving average despite a strong first-quarter report. But the stock managed to climb back above the line. Late Monday, the networking equipment maker topped earnings and revenue expectations. The company’s revenue guidance for the current quarter was well above views.

The Innovator IBD 50 ETF (FFTY) rose 0.8%, with natural resource stocks leading.

Occidental Petroleum (OXY) climbed more than 3% and is rising from support at the 10-week moving average.

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