Nasdaq remains at fresh 2023 highs as Dow wavers after cooler-than-expected wholesale inflation data ahead of Fed decision

What’s driving markets

The S&P 500 and the Nasdaq Composite were sitting at their best levels since early 2022 on Wednesday morning, while the Dow industrials were struggling for a direction after cooling wholesale inflation boosted hopes the Federal Reserve is finished raising borrowing costs.

U.S. wholesale prices were unchanged in November in another sign of gradually easing inflation, the U.S. Bureau of Labor Statistics said. Economists polled by the Wall Street Journal had forecast a 0.1% increase in the producer-price index.

A separate measure of “core” wholesale prices that strips out volatile food, energy and trade margins edged up 0.1% last month, the government said.

Fed rate decision: Live coverage of FOMC meeting, dot plot and Powell press conference

The central bank concludes its two-day policy meeting on Wednesday, and investors were placing a 98.2% probability it will reveal at 2 p.m. Eastern that it is keeping interest rates unchanged at a range of 5.25% to 5.50%. It is also widely expected to stand pat at the next meeting in January, according to the CME FedWatch Tool.

The market is anticipating the next move by the Fed will be a cut in rates after its May meeting, and so traders will be keen to see whether the Fed’s forecasts and Chair Jerome Powell’s comments, starting at 2:30 p.m., match that narrative.

The Fed’s outlook will determine investor thinking in the shorter term, and will likely be market moving given the higher levels of optimism which have been building over the last couple of months, according to Richard Hunter, head of markets at Interactive Investor.

“[A]ny mention of potential rate cuts next year would be seized upon, especially since this is not something [to] which the Fed has yet alluded. It has instead maintained that, based on the information before it, the base case remains that rates will remain higher for longer until such as victory can be declared in the fight against inflation,” said Hunter.

Companies in focus

• LifeMD Inc.’s stock
  LFMD,
  -4.14%
  soared 7% Wednesday after the virtual primary care provider said it’s teaming up with Medifast Inc. 
  MED,
  -10.52%
  to create a clinically supported weight management program that will include the new class of weight-loss drugs called GLP-1 receptor agonists.

• Pfizer Inc.’s stock 
  PFE,
  -8.13%
   slid 9.3% after the drug company set 2024 revenue and profit forecast below Wall Street expectations.

• Tesla Inc.’s stock 
  TSLA,
  -1.32%
  fell 0.6% Wednesday after the electric vehicle company was recalling more than 2 million vehicles due to autopilot control issues.