Stocks close higher, snap 2-day losing streak as Wall Street shakes off Fed minutes

Stocks rose Wednesday even after the Federal Reserve reiterated that it plans to raise interest rates and keep them high in an attempt to tame inflation.

The Dow Jones Industrial Average rose 133 points, or 0.40%, rallying from lows of the day but remaining off the highs. The S&P 500 and the Nasdaq Composite also dipped but remained up 0.75% and 0.69%, respectively.

It was the first positive close of the year for the three major indices and broke two consecutive days of losses. All 11 sectors in the S&P 500 closed higher Wednesday.

—Carmen Reinicke

Minutes from the December Fed meeting indicated that central bankers are concerned that markets are underestimating their resolve in tackling inflation, according to Citigroup economists.

The meeting summary, released Wednesday, emphasized multiple times that policymakers see rates continuing to rise and staying there for "some time."

One passage also noted that a smaller rate increase of half a percentage point at the meeting, following three straight three-quarter point moves, "was not an indication of any weakening of the Committee's resolve to achieve its price-stability goal or a judgment that inflation was already on a persistent downward path."

Markets are pricing a smaller quarter-point move when the next meeting concludes Feb. 1, which Citi says is a mistake.

"Fed officials are clearly growing more uncomfortable with the market underpricing their likely policy path and may use more hawkish rhetoric ([Chairman Jerome] Powell speaks Tuesday) to drive front-end rates higher and financial conditions tighter," Citi economist Andrew Hollenhorst said in a client note. "We continue to expect a 50bp hike in February and a 5.25-5.50% terminal range."

Market pricing is for the fed funds rate to rise to about a 4.75%-5% range by mid-2023 and stay there through the year, according to CME Group data. Prior to the release of the minutes, traders had been pricing in at least one quarter-point reduction by the end of the year.

—Jeff Cox

The Federal Reserve is trying to convince markets it has no intention of cutting interest rates any time soon, according to Moody's Analytics chief economist Mark Zandi.

In the minutes of the Fed's last meeting, released at 2 p.m., the central bank said no members wanted to cut interest rates this year.

"I think they are trying to guide markets from thinking rates are going to come down quickly this year. If you look at market expectations, the fed funds rate comes up to 5% shortly and then comes back down quickly in the back end of the year," he said. "The message in the minutes is rates are going to be higher for longer. Who knows at the end of the day if they are going to keep rates that high for long, but that's the message they wanted to send."

-- Patti Domm

The latest Federal Reserve meeting minutes threw cold water on market's hopes that the central bank will pause its rate hikes soon or even pivot and begin cutting this year, according to Mike Loewengart of Morgan Stanley Global Investment Office.

"The Fed minutes are a good reminder for investors to expect rates to remain high throughout all of 2023. Amid a persistently strong job market it makes sense that fighting inflation remains the name of the game for the Fed," he said in a Wednesday note.

"We will get our first glimpse of just how strong hiring is this week and whether the labor market can continue to withstand higher rates," he added. "Bottom line is that even though we flipped the calendar, the market headwinds from last year remain."

—Carmen Reinicke

The following charts show how the three major indexes moved in the 30 minutes leading up to and directly following the release of the Federal Reserve's meeting minutes:

— Alex Harring

Consensus estimates on AWS are "meaningfully too high" as demand for cloud infrastructure demand dwindles, according to UBS.

Given this backdrop, analyst Lloyd Walmsley maintained his buy rating on Amazon but trimmed the Wall Street firm's price target on shares to $125 from $165 a share, representing 46% upside from Tuesday's close.

"We've entered a more mature 'phase two' of market development, likely marked by slower growth as the still-huge portion of remaining workloads consists of more complex and integrated applications that have greater migration friction," he said. "What we're now seeing is very likely a post-pandemic growth normalization or 'digestion phase' coupled with a tougher macro and early signs of maturation."

UBS reduced its estimates on AWS, expecting below consensus top line growth for that segment both this year and in 2024. The firm, meanwhile, expects below consensus revenue but higher margins from Amazon's retail unit, viewing slower top line growth as "largely priced" in to the stock and its valuation.

— Samantha Subin

The Federal Reserve released the minutes from its Dec. 13-14 meeting, which showed central bank officials expect rates to be higher for "some time."

"Participants generally observed that a restrictive policy stance would need to be maintained until the incoming data provided confidence that inflation was on a sustained downward path to 2 percent, which was likely to take some time," the meeting summary stated. "In view of the persistent and unacceptably high level of inflation, several participants commented that historical experience cautioned against prematurely loosening monetary policy."

"A number of participants emphasized that it would be important to clearly communicate that a slowing in the pace of rate increases was not an indication of any weakening of the Committee's resolve to achieve its price-stability goal or a judgment that inflation was already on a persistent downward path," the minutes said.

— Jeff Cox

Ed Yardeni of Yardeni Research is optimistic that the Federal Reserve can still pull off a soft landing for the U.S. economy, even as it pushes on with aggressive rate hikes to tame high inflation.

Part of this is due to GDP figures, which currently signal no slowdown, and the strength of the U.S. consumer.

"I think consumers are going to remain resilient," he said on CNBC's "The Exchange" Wednesday. He added that consumers may eat into excess savings in the first half of the year, but that he sees wages rising faster than prices in the second half.

In addition, a shift in spending from goods to services will help bolster the economy.

Still, he doesn't foresee a pivot from the Fed anytime soon. His prediction is that the central bank will put its terminal rate at 5% or 5.25% and then keep it there, a marked difference from previous tightening cycles.

—Carmen Reinicke

Employers may have "return to office" on their list of 2023 resolutions, but Deutsche Bank says it's too soon to be optimistic.

A slow down in the economy could shift the balance of power back to companies, nudging workers back to the office, but it also may prompt companies to cut costs, said analyst Derek Johnston. Since many office tenants are embracing hybrid work, they may not need as much space. That trend will keep the pressure on office REITS, he said.

Office vacanies are sitting at a record high of 18.5%, according to data service REIS. It predicts that number could inch higher before it settles at 18.8% in 2024, and it doesn't expect a decline to 18.3% until 2026. Higher vacanies will pressure rent growth, Deutsche Bank said.

Deutsche takes Boston Properties and SL Green to hold from buy.

"Landlords have been placed into a tough position, with investor sentiment mimicking Malls REITs in 2018/19, placing the property type in a prolonged 'show me' position where future leasing and rent spreads will determine Office REITs mid to [long-term] invest-ability," Johnston wrote.

—Christina Cheddar Berk

Shares GE Healthcare Technologies gained more than 5% during its first day of trading as a company independent from General Electric.

The new company, which focuses on medical technology, pharmaceutical diagnostics and digital solutions, debuted on the Nasdaq Wednesday under the ticker symbol GEHC.

CEO Peter Adrduini told CNBC earlier Wednesday that GE Healthcare Technologies has a deep history of innovation, but will come out now as a "more focused, faster, agile" company.

The spinoff is part of GE's plan to split into three separate companies. Its energy segment is expected to be spun off in 2024. GE's stock was up more than 3% in midday trading.

— Michelle Fox

Here are some of the stocks making the biggest moves in midday trading:

Maxeon Solar Technologies — The solar company gained about 14% after being upgraded to outperform from market perform by Raymond James. The firm cited the stock's "steep drop from the initial euphoria created by the Inflation Reduction Act."

Honeywell — Shares dropped nearly 2% after being double downgraded by UBS to sell from buy, citing Honeywell's full valuation and anticipated order slowdown. UBS also lowered its price target to $193 from $220.

Celanese — The chemical and specialty materials company added nearly 7% after being upgraded to outperform from sector perform by RBC Capital Markets. Better-than-expected integration of the mobility and materials segment it acquired from DuPont was among the reasons cited.

To read about more stocks making moves during midday trading, click here.

— Michelle Fox

PayPal may be finding its footing and stopping Apple Pay's advances into the payment industry, according to research from Mizuho said.

Analyst Dan Dolev, who has a buy rating on the stock, said that web traffic data from PayPal's largest e-commerce partners appeared to stabilize in the second half of last year.

"Our analysis shows that following a decline in 2021 that lasted through 1H22, PYPL's share of outgoing traffic from this select group of large merchants has been stable in recent months," the note said.

Shares of PayPal were up 4.4% in midday trading.

— Jesse Pound

E-commerce platform Etsy is exiting the pandemic "stronger" and should rally this year, according to Needham.

Analyst Anna Andreeva upgraded the stock to buy from hold. She also set a price target of $160, which implies the stock should see an upside of 40.9% over where it closed Tuesday.

Andreeva said she's optimistic because the platform has been able to keep the majority of its pandemic buyers and is unique among peers. She said the stock underperformed in 2022 mainly because of multiple contraction, which is when a stock's shares do not increase in line with earnings.

"While macro overhang remains, we think Etsy's secret sauce is diversification of categories and relative value prop," Andreeva said in a Wednesday note to clients. "With ecomm penetration expected to bounce back in '23, we think ETSY should be gaining share again."

Etsy gained 3% in trading Wednesday. It dropped 45.3% in 2022.

— Alex Harring

As a new year commences, Wells Fargo has its eye on six stocks.

The firm said the stocks are smart tactical plays and could have positive catalysts in the first quarter. CNBC Pro subscribers can see part of that list here.

— Alex Harring

U.S. Treasury yields were falling Wednesday but were off their lows after strong data on job openings.

The November Job Openings and Labor Turnover report Wednesday showed job openings totaled 10.5 million, which was stronger than expected.

The 10-year yield was down about 9 basis points. A basis point equals 0.01 of a percentage point.

The closely watched 10-year yield was as low as 3.66% before climbing back to 3.69% in late morning trading. Yields move opposite price.

Greg Faranello of AmeriVet Securities said the move lower was retracing the run up to 3.87% at the end of last year. "We got down to a clean slate...We're in a bit of a range now," he said.

The bond market is heavily focused on Friday's upcoming jobs data, which could factor into the Federal Reserve's rate hiking decision in early February. The Fed has been trying to cool inflation and the hot labor market with its rate hikes. Economists expect strong job growth of about 200,000 in December.

--Patti Domm

Minneapolis Federal Reserve President Neel Kashkari sees interest rates climbing at least another percentage point before the central bank backs off in its efforts to bring down inflation.

In a post on the central bank district's web site Wednesday, Kashkari said he envisions the benchmark fed funds rate rising to 5.4%. The rate is currently targeted in a range between 4.25%-4.5%, following a series of increases last year that took the short-term borrowing rate to its highest level in 15 years.

Kashkari's estimate exceeds the consensus among his fellow policymakers of 5.1%, according to projections released in December.

A voter this year on the rate-setting Federal Open Market Committee, he also cautioned that rates could keep climbing if the Fed doesn't see concrete signs of inflation abating.

"Once we see the full effects of the tightened policy, we can then assess whether we need to go higher or simply remain at that peak level for longer," he wrote. "To be clear, in this phase any sign of slow progress that keeps inflation elevated for longer will warrant, in my view, taking the policy rate potentially much higher."

—Jeff Cox

Shares of Coinbase climbed 10% on Wednesday after the New York Department of Financial Services announced a settlement agreement with the cryptocurrency exchange.

According to the agreement, the regulators had previously identified shortcomings with Coinbase's compliance process, but an independent monitor delivered a report in August that the company has made improvements.

Coinbase will pay a $50 million penalty as part of the deal, and has also committed to spend $50 million on its compliance programs over the next two years, the company said. The investigation had been previously disclosed to investors.

KBW analyst Kyle Voigt said in a note to clients that the penalty amount was "not significant."

— Jesse Pound, Michael Bloom

Travel stocks rose Wednesday, outperforming the broader market along with shares of casino stocks such as Wynn Resorts and Las Vegas Sands.

Carnival Cruise Lines rose more than 7% after saying it would raise prices for guests. Peers Norwegian and Royal Caribbean climbed 3% and 4.9% respectively.

Airline stocks also gained, with United Airlines jumping 5%. Delta and American rose 4.9% and 4.7% each.

—Carmen Reinicke

A few stocks hit new highs and lows early in the trading session Wednesday.

New S&P 500 highs:

• Las Vegas Sands Corp (LVS) is trading at levels not seen since July, 2021
• Chubb (CB) trading at all-time high levels back through 1993 (ACE and Chubb are now one company)

Other highs:

• Amdocs (DOX) trading at levels not seen since Mar, 2000

Notable lows:

• Rivian Automotive (RIVN) trading at all-time lows back to its IPO in Nov, 2021
• Ginkgo Bioworks (DNA) trading at all-time lows back to its SPAC merger in Sept, 2021

—Carmen Reinicke, Chris Hayes

Investors are watching the failure by House Republicans to elect a speaker for a taste of what may happen later this year when the debt ceiling becomes an issue.

For the first time in 100 years, the majority party in the House did not elect a speaker in its first vote. On Tuesday, House Republicans could not muster enough support in three separate votes for Rep. Kevin McCarthy, R-Calif.

Conservative Republicans refused to support him over disagreement about the direction of the GOP, which has a slim House majority over Democrats. The House reconvenes at noon. The lack of a winner for speaker delays the start of business for the new Congress.

"To be sure, the paralysis in the House underscores how difficult it will be for GOP leaders to corral its own members – and that poses increased risks of a shutdown or a debt ceiling debacle," writes Andy Laperriere, head of U.S. policy at Piper Sandler. "And there are countless reasons to expect a limited number of important bills to become law over the next two years (although there are always some bills important to investors that pass in every two-year congressional cycle)."

Congress last raised the debt ceiling by $2.5 trillion December, 2021, providing enough borrowing capacity to get past the midterm elections.

--Patti Domm

The ISM manufacturing index came in at 48.4 for December, signaling an economic activity contraction in the sector. However, that number was roughly in line with the 48.5 expected by Dow Jones.

"Regarding the overall economy, this figure indicates contraction after 30 straight months of expansion. The Manufacturing PMI figure is the lowest since May 2020, when it registered 43.5 percent," wrote Timothy Fiore, chair of the Institute for Supply Management.

"Demand eased, with the (1) New Orders Index remaining in contraction territory, (2) New Export Orders Index markedly below 50 percent, (3) Customers' Inventories Index in 'just right' territory, and (4) Backlog of Orders Index recovering slightly but still in strong contraction," Fiore added.

— Fred Imbert

Job openings in November were 10.5 million, according to the latest Job Openings and Labor Turnover Survey, or JOLTS.

The report came in slightly better than expected even though it was little changed from the previous month. Analysts expected JOLTS to be about 10 million in November.

The number of hires and total separations were also little changed at 6.1 million and 5.9 million, respectively. There were also 4.2 million quits and 1.4 million layoffs and discharges during the month.

—Carmen Reinicke

Shares of Apple and Tesla rose Wednesday, recouping losses from Tuesday when the two stocks weighed on the broader market.

Apple was up 1.26% in early trading Wednesday after slipping more than 3% a day earlier. Tesla rose 3.6% after slumping more than 12% to a 52-week low on Tuesday.

—Carmen Reinicke

Stocks rose at Wednesday's open as Wall Street attempted to rebound on the second trading day of 2023.

The Dow Jones Industrial Average rose 115 points, or 0.35%. The S&P 500 and the Nasdaq Composite climbed 0.52% and 0.73%, respectively. The yield on the 10-year U.S. Treasury bond slipped more than 11 basis points as investors await minutes from the central bank's latest meeting. Yields and prices move in opposite directions and one basis point is equivalent to 0.01%.

—Carmen Reinicke

Shares of Apple are poised to open Wednesday in the green after slipping more than 3% on Tuesday, weighing on the broader stock market.

In premarket trading Wednesday, the bellwether stock was up 0.86%, giving strength to the Dow.

—Carmen Reinicke

UBS downgraded Honeywell to sell from buy and lowered its price target to $193 from $220 on Wednesday.

Analyst Chris Snyder cited the stock's full valuation and the company's anticipated order slowdown, which would impact its backlog burn.

"HON's outsized $29B backlog into the 2023 slowdown will likely protect near-term results; however, order momentum is needed to protect valuation," he wrote in a note.

Honeywell burned material backlog in the third quarter and that dynamic could intensify in the first half of 2023 on further order compression amid a macro slowdown and normalizing lead time, he added.

Shares of Honeywell fell more than 2% in premarket trading.

— Michelle Fox

Chinese ADRs climbed in premarket trading after Ant Group received approval to increase its registered capital, a sign that Chinese regulators may be loosening their grip on the country's tech sector.

Shares of JD.com and Alibaba each rose more than 6%. NetEase, Baidu and Trip.com were other stocks making notable moves higher.

Ant Group, which previously had its own IPO plans scuttled by regulatory concerns, was allowed to double its registered capital as part of the new plan.

— Jesse Pound

Shares of Salesforce jumped nearly 4% in early market trading after the company announced it would cut its staff by at least 10% and close some of its offices.

The moves will help the technology services company save money amid economic uncertainty. Salesforce expects the cuts to yield about $1.4 billion to $2.1 billion in charges, of which about $800 million to $1 billion will be recorded in the fourth quarter of fiscal 2023.

—Carmen Reinicke

Amid 2022's dismal stock performance, Bank of America clients were net buyers of U.S. equities, according to a Wednesday note by Savita Subramanian.

Securities clients of the firm bought $69 billion in U.S. equities. Corporate, institutional and private clients were also net buyers of equities, with the last seeing the first inflows since 2017. Clients bought in eight of 11 sectors, with technology and communication services seeing the largest inflows. Industrials, financials and utilities saw outflows.

That signals that the market has not yet hit its low, according to the note. While BofA's sell side indicator has slipped, it's not yet at a "buy," which would mean market capitulation.

In addition, corporate buybacks slowed relative to 2021.

—Carmen Reinicke

Stocks had a rough start to 2023, but held up despite large slumps in Apple and Tesla. That's a good sign that there's some relief on the way in the near-term, according to Rob Ginsberg of Wolfe Research.

"Stripping out price and just focusing on longer-term moving averages (the 200- day for our lead chart), it becomes quite clear that equities need to make a stand at longer-term support," Ginsberg wrote in a Tuesday note.

"Yes, we believe that this crucial ascending support eventually gives way, but the ability of the broader market to hang in there despite the rapid deterioration in mega cap bellwethers such as AAPL and TSLA, suggests to us that a little near-term relief is probably in order before the next significant leg lower," he said.

—Carmen Reinicke

RBC analyst Joseph Spak lowered his price target on Tesla to $186 from $225, citing concern over the electric vehicle maker's outlook after it reported lower-than-expected deliveries for the fourth quarter.

"As we survey TSLA stock, we continue to see a transition in outer-year expectations (deliveries and margins) needing to occur. That said, we believe TSLA is still likely to extend their EV advantage over peers," Spak wrote.

Tesla shares fell more than 12% on Tuesday on the back of the company's latest vehicle delivery numbers.

— Fred Imbert

UBS analyst Karl Keirstead downgraded Microsoft shares to neutral from buy, citing concern around the tech giant's Azure and Office businesses.

"We are downgrading our rating on Microsoft shares to a Neutral from a Buy on the back of a weaker round of field checks on the cloud providers including Azure, a view that Office seat growth is likely to moderate in 2023 and that Microsoft's multiple already feels fair, not cheap," Keirstead wrote in a Tuesday note.

Microsoft shares fell 2% following the call.

CNBC Pro subscribers can read more here.

— Sarah Min

Stock markets endured a horrible 2022 as major indexes clocked their worst performances in more than a decade.

As market pros warn investors of bumpy times ahead, CNBC Pro used FactSet data to screen for low-volatility stocks that not only beat the market in 2022 but are expected to rise further this year.

Pro subscribers can read more here.

— Zavier Ong

The once-hot chip sector suffered in 2022, but Wall Street looks to be turning more optimistic on semiconductor stocks for the year ahead.

Recently, several pros have urged investors to take a longer-term view on the sector, given the importance of chips in several key secular trends.

Analysts named one stock in particular they're bullish on, citing its earnings potential and future profitability.

CNBC Pro subscribers can read more here.

— Weizhen Tan

Shares of Alibaba listed in Hong Kong rose 7.11% in Wednesday's morning trade – after China's Banking and Insurance Regulatory Commission approved a plan for Ant Group's capital expansion plan for its consumer financial unit based in Chongqing.

According to a notice posted last week, Chinese regulators gave the greenlight to billionaire Jack Ma's financial technology firm to raise 10.5 billion yuan ($1.5 billion).

Ant Group is an affiliate of Alibaba in which the e-commerce giant owns 33%. Ant Group runs the Alipay mobile payments wallet in China. Alibaba's shares rose 2.78% on Tuesday, the first trading session after the notice was posted.

Other companies named in the notice included Hangzhou Jintou Digital Technology Group, Nanyang Commercial Bank, Zhejiang Sunny Optical and China Huarong Asset management.

The approval marks progress in the state-led regulatory overhaul of the fintech giant.

– Jihye Lee, Evelyn Cheng

Don't be surprised if software stocks outperform in 2023, according to Trivariate Research's Adam Parker.

"I'll bet you the software index beats the S&P 500 in 2023, and I think it's because the Fed will start getting less hawkish — maybe even dovish by year end — and that will be good for multiples," he told CNBC's "Closing Bell: Overtime" on Tuesday.

Software stocks suffered in 2022 as growth tumbled in the wake of rising interest rates. After this reset, Parker said he sees "tons" of stock opportunities in the $3 billion to $20 billion market cap range, down 80% and projected to improve productivity going forward.

"The numbers have been reset massively from where we were, and so, I just think the risk-reward is getting from horrendous a year ago to not terrible," he said.

— Samantha Subin

Apple and Amazon were biggest losers of market cap in 2022, shedding $846.34 billion and $834.06 billion in market cap, respectively.

The value shed by each of the two companies overshadows the total size of some other popular tech stocks, with Bespoke Investment Group calling the numbers "staggering" in a tweet.

Broken down, Amazon's market cap losses alone equates to 10 PayPals and 49 Rivians. Read more on the sheer size of Apple and Amazon's losses and what that means in relation to other companies here.

— Alex Harring, Samantha Subin

Stock futures opened slightly lower in overnight trading Tuesday.

Futures tied to the Dow Jones Industrial Average slipped 0.14%, or 48 points, while S&P 500 and Nasdaq 100 futures dipped 0.14% and 0.13%, respectively.

— Samantha Subin