U.S. stocks closed Wednesday lower as another bout of earnings results hit traders' desks and Wall Street weighed the outlook for interest rates after Federal Reserve Chair Jerome Powell signaled more hikes may be needed than markets are pricing in.
In specific stock moves, shares of Alphabet (GOOG) tanked 7.4% after the Google parent revealed a batch of new AI-powered features for its Search, Maps, and Lens apps and a presentation of the technology misfired.
The announcement came just one day after Microsoft (MSFT) unveiled a new version of its Bing search engine running on a more powerful version of OpenAI's popular ChatGPT natural language AI technology. Shares of Microsoft closed down 0.3% after paring gains from earlier in the day.
Under Armour (UA) reversed an advance and slid 8.4% in the second half of the trading day as investors' focus shifted from the athletic apparel retailer lifting its profit forecast to high discounts and bloated inventories.
Uber's (UBER) stock climbed 5.5% after earnings for the last three months of 2022 beat expectations and CEO Dara Khosrowshahi said the company was focused on achieving profitability in 2023 as post-pandemic demand for ride-hailing recovers.
CVS Health (CVS) shares rose nearly 3.5% after the pharmacy chain announced it has agreed to buy Oak Street Health in a $10.6 billion deal, marking its second big acquisition in the health-care space in the past two years.
The moves Wednesday morning come after investors cheered remarks from Powell at a speaking engagement in Washington, D.C., in which he embraced the presence of "disinflation" in the U.S. economy. On Tuesday, the S&P 500 gained 1.3%, the Dow 0.7%, and the Nasdaq 1.9%.
DataTrek's Nicholas Colas notes that Powell's comments did not sway the market’s expectations of the likely path of monetary policy this year. The rate-sensitive two-year Treasury yields were unchanged following the speech, Colas pointed out — at 4.46% while federal funds futures were at at 4.50-4.75% — indicating policy rates over the coming 24 months could remain where they are now.
"[Yesterday] afternoon’s equity market rally shows markets like Powell’s slow and steady, incoming data-centric approach to monetary policy," Colas said. "He could have used Friday’s jobs report as an excuse to signal more aggressive policy action in March, but he did not."
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc