UKX FTSE 100 Index

By Chris Matthews and Barbara Kollmeyer, MarketWatch

S&P 500 threatens to break three-day record closing streak

U.S. stocks traded mixed Wednesday afternoon after Federal Reserve Chairman Jerome Powell acknowledged a slowdown in business and household spending, but described low inflation as "transitory" and denied there was a "strong case" to expect an interest-rate cut in the near term.

How are major indexes performing?

The Dow Jones Industrial Average fell 15 points, to 26,579, a loss of 0.1%, while the S&P 500 index fell 3 points, or 0.1%, to 2,943. Meanwhile, the Nasdaq Composite Index rose 12 points, a gain of 0.2%, to 8,108.

On Tuesday, the S&P 500 set a third straight record close at 2,945.83, and the index also set a new intraday high early Wednesday at 2,954.10. The Nasdaq rose 50.61 points to 8,146 at session highs, while the Dow was up as many as 96.48 points, to reach 26,689.39.

What's driving the market?

After perking up briefly following the announcement of the Fed's decision to leave the benchmark fed-funds rate at a range between 2.25% and 2.5% (http://www.marketwatch.com/story/fed-sticks-with-patient-policy-notes-weaker-core-inflation-2019-05-01), stocks turned mostly lower as Powell elaborated on the move.

While the Fed statement highlighted data showing that the rate of price inflation has fallen and remains under the central bank's 2% target, Powell stressed that he saw "no strong case" for expecting the central bank's next move to be a rate cut, investors in the fed funds futures market have predicted. According to CME Group (https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html), fed funds futures markets are showing a 61.4% likelihood that the Fed cuts interest rates before year-end.

Live blog recap:Powell addresses reporters after Fed keeps rates unchanged (http://www.marketwatch.com/story/live-blog-of-fed-interest-rate-decision-and-powell-press-conference-2019-05-01)

Over the past six weeks, Fed officials have emphasized a need for patience, signaling they want to leave rates on hold until they are certain about the economic outlook. Many economists expect the Fed to remain on hold for some time, possibly through the end of 2020.

Dow component Apple (AAPL) was getting attention after the iPhone maker reported another fall in profit and revenue, but beat expectations for first-quarter performance (http://www.marketwatch.com/story/apple-stock-gains-after-earnings-outlook-tops-expectations-2019-04-30). Moreover, Apple signaled that the worst is over for its China business, and did report momentum in its services businesses, which stock bulls see as key to the company's growth. Shares were up 7% Wednesday morning.

First Take: Apple is optimistic, and it isn't because of the iPhone (http://www.marketwatch.com/story/apple-is-optimistic-and-it-isnt-because-of-the-iphone-2019-04-30)

Which stocks are in focus?

Shares of CVS Health Corp.(CVS) rallied 5.5% after the pharmacy and health-care services giant reported first-quarter earnings (http://www.marketwatch.com/story/cvs-healths-stock-surges-after-profit-revenue-and-same-store-sales-beat-expectations-2019-05-01) and sales that beat Wall Street expectations, while raising its outlook for the full-year 2019.

Estée Lauder Cos. Inc. (EL) shares fell 0.4%, reversing early morning gains as high as 4.9% after the makeup manufacturer reported first-quarter sales that beat analyst expectations, while predicting revenue would grow between 7% and 8% during the full-year 2019.

Molson Coors Brewing Co. (TAP) fell 5.5%, after the company reported first-quarter earnings (http://www.marketwatch.com/story/molson-coors-earnings-fall-short-of-estimates-2019-05-01) that fell short of forecasts.

Shares of Humana Inc. (HUM) retreated 2.6%, even after the insurer reported first-quarter earnings and revenue (http://www.marketwatch.com/story/humana-tops-first-quarter-revenue-and-earnings-expectations-2019-05-01) Wednesday morning that topped Wall Street expectations, while also raising its full-year guidance.

Yum! Brands Inc.(YUM)stock fell 2.6% Wednesday morning, after the Taco Bell parent reported first-quarter results (http://www.marketwatch.com/story/yum-brands-earnings-beat-expectations-2019-05-01).

Shares of Royal Carbanion Cruises Ltd. (RCL) rose 7.9% Wednesday, after the cruise operator reported first-quarter earnings (http://www.marketwatch.com/story/royal-caribbeans-stock-surges-after-earnings-revenue-beat-expectations-2019-05-01), revenue and net yields that beat expectations.

Hotel operator Hilton Worldwide Holdings Inc. (HLT) announced first-quarter earnings growth of 16% Wednesday, well above Wall Street forecasts. Share rose 6%.

Chip group Qualcomm Inc.(QCOM), social-gamer Zynga Inc.(ZNGA), wearables maker FitBit Inc.(FIT) and mobile payment group Square Inc.(SQ) will report after the close.

Read:Qualcomm short sellers are out in full force ahead of earnings (http://www.marketwatch.com/story/qualcomm-short-sellers-are-out-in-full-force-ahead-of-earnings-2019-05-01)

(http://www.marketwatch.com/story/qualcomm-short-sellers-are-out-in-full-force-ahead-of-earnings-2019-05-01)Check out:Qualcomm earnings, schmernings: Tell us more about the Apple settlement (http://www.marketwatch.com/story/qualcomm-earnings-schmernings-tell-us-more-about-the-apple-settlement-2019-04-29)

What are analysts saying?

"The feature out of this meeting for investors is the Fed's economic outlook, which highlights "sustained expansion of economic activity" balanced with a soft global economic picture and "muted inflation pressures," wrote Jason Pride, Chief Investment Officer of Private Wealth at Glenmede in emailed comments.

"With the U.S. economy at or near full employment, the expectation for future rate changes will essentially be a referendum on inflation, which has remained habitually below the Fed's 2% target this cycle."

"We're getting a lot of mixed signals in terms of macro data," Tom Martin senior portfolio manager at Globalt Investments told MarketWatch, pointing to the surprisingly strong ADP jobs report and the worse-than expected ISM manufacturing report as the latest examples of conflicting data that are making it difficult to get a read on the trajectory of the U.S. economy.

"Corporate earnings season has also been indicative of this trend," he said. "Apple is your bullish data point on the day for company news, but even within sectors you have some very good reports that indicate a decent economy and some very bad reports that indicate a not very good economy."

What else is on the economic calendar?

Payroll firm ADP released its estimate of private-sector job growth in April, showing the U.S. economy added 275,000 new jobs (http://www.marketwatch.com/story/adp-private-sector-job-growth-surges-by-275000-but-theres-a-caveat-2019-05-01), well above the 176,000 consensus estimate, according to FactSet. However, Mark Zandi, Moody's Analytics chief economist and architect of the ADP report said that the figure "overstates the case" of job growth and predicted that Friday's official government job report will show less robust employment growth.

Markit's manufacturing purchasing managers index for April came in at 52.6, a slight uptick from the near two-year low seen last month, and above consensus expectations for a reading of 52.4, according to FactSet data.

The more closely watched Institute for Supply Management manufacturing index came in at 52.8% (http://www.marketwatch.com/story/manufacturers-grow-at-slowest-pace-in-april-since-president-trump-elected-ism-finds-2019-05-01), well below consensus expectations of 54.7%, according to a MarketWatch poll of economists, and below the March reading of 55.3%.

The Commerce Department said construction spending fell by 0.9% (http://www.marketwatch.com/story/construction-spending-tumbles-in-march-as-housing-takes-it-on-the-chin-2019-05-01) in March, compared with February, below economists expectations of a 0.4% decline, per a MarketWatch survey.

How are other markets faring?

Most stock markets in Asia were closed for holidays (http://www.marketwatch.com/story/australian-stocks-rise-with-most-asian-markets-closed-for-holiday-2019-04-30), though Australia's S&P/ASX 200 closed up 0.8%, while New Zealand's NZK-50 fell 0.5%. European stock markets were also largely closed for May Day celebrations, while The U.K's FTSE 100 was edging lower (http://www.marketwatch.com/story/sainsburys-leads-london-markets-quietly-higher-2019-05-01).

The price of crude oil was on the decline (http://www.marketwatch.com/story/us-oil-prices-drop-on-indication-of-domestic-supply-build-global-brent-gains-2019-05-01) Wednesday, along with gold prices (http://www.marketwatch.com/story/gold-edges-lower-ahead-of-fed-decision-2019-05-01). The U.S. dollar was also retreating (http://www.marketwatch.com/story/dollar-skid-continues-ahead-of-federal-reserve-decision-2019-05-01), relative to its peers.

(END) Dow Jones Newswires

May 01, 2019 15:31 ET (19:31 GMT)

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