The S&P 500 posted a small gain on Wednesday. Traders looked at the chance of future Fed rate cuts amid high inflation. The S&P 500 rose 0.16% to 5,918.25.
The Dow Jones slipped 0.06% to 19,478.88. The Nasdaq went up 106.84 points, or 0.25%, to 42,635.20. The three indexes may have a second weekly loss in a row.
Minutes from the Fed’s December meeting showed most members thought inflation risks had gone up. This made investors worry there may be fewer rate cuts than expected this year. “Participants said the Committee was near the point to slow policy easing,” the minutes said.
Bond yields have been rising on bets that President-elect Trump’s plans could cause inflation to spike. Yields changed throughout Wednesday’s trading. The 10-year Treasury yield briefly topped 4.7%, near late April levels.
After a lot of economic data this week, investors now await Friday’s December jobs report. “Forecasters are having a hard time modeling interest rates, growth, and inflation due to uncertainty around Trump’s developing policies,” said Jeffrey Roach, chief economist for LPL Financial. “Markets could get choppy if Friday’s payroll release surprises.”
Coca-Cola shares rose about 1.1% Wednesday.
TD Cowen upgraded the stock and kept a $75 price target, seeing over 20% upside.
Fed’s inflation concerns shape outlook
Analyst Robert Moskow said Coca-Cola can grow beverage consumption in global markets long-term.
“KO keeps executing well through successful global refranchising and great domestic work,” Moskow told clients. “We see the stock’s recent drop as an overreaction.” Coca-Cola has lost about 12% in three months. Concentration is a key early 2025 risk, with the market relying on a few mega-cap tech firms, wrote Venu Krishna of Barclays.
“The portion of S&P members beating the index hit a one-year high by October, but dropped sharply the last 2 months of 2024,” Krishna noted. “Big Tech is now 29.3% of the S&P 500 and made up half the index’s 2024 gains, down slightly from 56% in 2023.”
Quantum computing stocks plunged after Nvidia CEO Jensen Huang said the tech is decades away. Quantum Computing Inc.
sank 47%, IonQ Inc. lost 44%, and Rigetti Computing fell over 44%. Fed minutes showed officials worried about inflation impact from Trump policies.
“Almost all participants judged inflation risks had increased,” the minutes read. “Participants indicated the Committee was near the point to slow policy easing.”
Edison International shares fell over 12.5% as wildfires destroy homes in the Los Angeles area. It was on track for its worst day since March 2020.
Constellation Energy tumbled over 5% on a report it may acquire Calpine Corp for $30 billion. Constellation operates nuclear plants. Calpine runs natural gas and geothermal plants.
Constellation is expected to play a key role in the data center boom.