The S&P 500 and Nasdaq Composite climbed Wednesday as traders positioned for a Federal Reserve rate decision, with chipmakers Intel and SK Hynix leading gains on a reported manufacturing deal. The Dow Jones Industrial Average hovered near the flatline while the 10-year Treasury yield eased below 5%.
The S&P 500 rose 0.5% Wednesday. The Nasdaq Composite added 0.9% as investors braced for a Federal Reserve decision that could open a new interest rate hike cycle. The Dow Jones Industrial Average traded just above the flatline.
Chipmakers lead the rally
Shares of Intel and SK Hynix gained 4% and 2%, respectively, after Reuters reported the two companies are in talks for SK Hynix to manufacture its memory chips in the U.S. for the first time. SK Hynix could lease part of Intel's planned chipmaking facility in Ohio, or form a joint venture, though no decisions have been made. Other chip stocks, including Advanced Micro Devices and Nvidia, gained as well.
Fed decision looms as yields ease
Futures markets were pricing in a quarter-point hike for Wednesday with 92.9% odds, according to the CME FedWatch tool. Odds of an additional quarter-point hike stood at 39.1% for October and 26.4% for December. The benchmark 10-year Treasury yield eased to 4.979%, pulling back after Tuesday's global bond sell-off pushed it to its highest level since July 2007.
Yardeni trims S&P 500 target
Ed Yardeni, president of Yardeni Research, cut his year-end S&P 500 target to 7,900 from 8,400. The new forecast signals upside of 4.1% from Tuesday's close of 7,585.73. According to CNBC: "The risks of a downturn have increased over the next three to six months," Yardeni said, pointing to higher Treasury yields driven by rising energy prices.
Technically, the S&P 500 tested a swing area between 7,573.60 and 7,617.37 Tuesday and held it, with buyers pushing the index higher Wednesday. A move above 7,617.37 would open the way toward the 100-hour and 200-hour moving averages at 7,667.37 and 7,695.83.
Sources: CNBC, Investor's Business Daily, InvestingLive
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