Inflation is a hot topic after the Fed's presidency, Jerome Powell, cools the stock market

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After three days of records, the enthusiasm of investors is a little weakened on Wednesday. Blame the Federal Reserve. As profits continued to rise, the Fed halted the party with a new statement after two days of meeting and a press conference hosted by Fed Chairman Jerome Powell. The statement and the press conference told a slightly different story, and this discrepancy was clear in the stock chart of the day.

Stocks touched their highs of the day shortly after the release of the Fed's statement at 2 pm In this text, the Fed has called for inflation or its absence. The bottom line was: "Over 12 months, headline inflation and non-food and energy inflation have fallen to less than 2%."

The declining wording was new and seemed to raise the hope that a rate cut would actually be imminent. President Powell quickly broke those dreams. During his next press conference, Powell said:

We suspect that some transient factors may be at work. Thus, our basic view remains that, with a strong job market and continued growth, inflation will return to 2% over time and will then be roughly symmetrical to our long-term goal.

Shares fell in the close, with the S & P 500 index ending the day down 0.75%.

Here is an excerpt of what Economist Joel Naroff of Naroff Economic Advisors sent on Wednesday afternoon:

The Fed's poor communication on inflation hit the markets. They first reacted as if the rates went down, then they gave up and even more.

Investors have already readjusted the chances of a rate cut at the next Fed meeting in June. Last week, investors were counting on a 25% chance of a quarter-point rate cut. Tonight, this probability has fallen to 7% and stock investors are back in a sales atmosphere.

The market in brief

Dow Jones Industrial Average
: -0.61% to 26,430.14

S & P 500
: -0.75% to 2,923.73

Nasdaq
: -0.57% to 8,049.64

The hot stock:
Royal Caribbean Cruises

+ 6.7%

The biggest loser:
Molson Coors Brewing

-7.5%

Best sector: Real estate + 0.0%

Worst sector: Energy -2.0%

Our obsession Tesla

The last controversy around
You're here

CEO Elon Musk – his exchange with the SEC on his Twitter habit – seems to be over. For the moment. On Tuesday, a US District Judge approved new settlement terms giving Musk a list of things he could not tweet about it.

But if someone was waiting for Musk to really pull out of Twitter, that did not happen. Since the SEC rules on Twitter were first published in a court case last Friday, Musk has tweeted 47 times. On Monday night, he responded "to an excellent analysis" to a blogger who had written an article titled "Tesla's Independence Day, Stocks, Short Sellers and More". This article includes this line on short selling:

Tesla's stock is currently one of the most sought-after stocks in the stock market. More than 32 million shares of Tesla shares (worth approximately $ 8 billion) are sold and are not held by the seller. If you think it sounds like some sort of loophole that we'll see again someday and ask how it was legal, you'd be right. Short sellers have every interest in spreading fear, uncertainty and doubt (known as FUD) on an action in the hope that it drops, ideally to $ 0, where they can buy their shares for short sale for a fraction of what they were sold for.

Musk does not change anytime soon.

This week, for the final episode of our Readback podcast, I spoke to my colleague David Marino-Nachison about the endless concern for Musk and Tesla. Consumers and readers remain focused on Tesla and reporters do not hesitate to provide a regular solution. We calculated that David was probably spending about a third of his time covering Tesla these days.

On the podcast, David sums up the three things that fuel Tesla's obsession: 1) Musc himself at the helm; 2) a company that took the novelty of the electric car and turned it into a status symbol that impresses both car critics and consumers, as well as technology experts; and 3) the ever-present possibility that Tesla still can not survive.

David and I discussed the three topics. Check out the episode here.

What we read

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AMD chief Lisa Su talks about Barron's new chips, cloud games and mergers and acquisitions

Richard Fain, CEO of Royal Caribbean, on results, consumer confidence and the future of society, Barron's

For the lowest paid workers, robot lords arrived at the Wall Street Journal

Earnings

Thursday's results calendar includes reports from Activision Blizzard, CBS,
Cigna
,
Dow
DowDuPont
,
Expedia
,
Gilead Sciences,
Kellogg
,
and
Monster Drink
.

A version of this article was published for the first time in Review & Preview, a daily email from Barron's. Sign up here and every night we'll review the news that has turned the markets around during the day and see what it means for your wallet in the morning.

Write to Alex Eule at [email protected]