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Stocks opened comfortably higher Tuesday, but lost steam as the session wore on as market participants weighed the latest developments in the Middle East. Rising oil prices were also in focus as the Federal Reserve kicked off its March meeting.
At the close, the blue-chip Dow Jones Industrial Average was 0.1% higher at 46,993, the broader S&P 500 was up 0.3% at 6,716, and the tech-heavy Nasdaq Composite had gained 0.5% to 22,479.
While the central bank is widely expected to keep rates unchanged, Wall Street will be watching to see how higher energy costs will impact the Fed’s inflation forecast and rate-cut plans.
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Today, front-month West Texas Intermediate (WTI) crude futures rose 2.9% to settle at $96.21 per barrel, and are now up nearly 44% for the month to date. Gas prices are rising fast, too, with the average price of a gallon of regular gas 30% higher than a month ago, at $3.79, according to AAA.
Higher gas prices have begun to weigh on consumer sentiment, as evidenced by the University of Michigan’s preliminary Consumer Sentiment Index for March, which was released last Friday.
The index was down 1.9% vs February, with gasoline prices having “the most immediate impact felt by consumers,” says Surveys of Consumers Director Joanne Hsu.
Arguably “the most serious economic risk of the war for the U.S. if the conflict drags on,” writes the Kiplinger Letter team, is higher inflation sparked by rising energy costs.
“The economy is likely strong enough to stay out of recession, even though higher gas prices would probably crimp spending by many consumers,” the group says. “But if high fuel prices last longer and filter through the economy more broadly, inflation could prove painful and force the Federal Reserve to nix plans to trim interest rates,” which could pressure housing and other rate-sensitive sectors.
According to CME FedWatch, futures traders are now expecting the first rate cut of 2026 to come at the September meeting. Just a few weeks ago, betting odds favored June.
You can follow along with all the latest news and updates on our March Fed meeting live blog.
Delta, American Airlines raise Q1 revenue guidance
Rising travel demand is helping to offset higher fuel costs for Delta Air Lines (DAL, +6.5%) and American Airlines Group (AAL, +3.5%). Both industrial stocks closed comfortably higher Tuesday after the companies raised their respective first-quarter revenue guidance.
Delta now expects (pdf) first-quarter revenue to be up in the high single-digit percentage range, an improvement over its previous forecast for year-over-year growth of 5% to 7%.
Demand has been “really, really great,” Delta CEO Ed Bastian told CNBC.
American Airlines, meanwhile, anticipates Q1 revenue growth of greater than 10% thanks to “stronger-than-expected demand.” Its previous guidance called for revenue growth of 7% to 10%.
Snowflake can rally 57%, says BofA Securities analyst
Over in the tech sector, Snowflake (SNOW, +0.1%) edged higher after BofA Securities analyst Koji Ikeda reiterated a Buy rating and a $275 price target on the artificial intelligence (AI) data cloud platform operator – representing implied upside of 57% to current levels.
The bullish note follows a meeting between Ikeda and members of Snowflake’s leadership team, which left the analyst “incrementally more positive” that its initiatives will “drive upside” to product revenue.
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Ikeda believes SNOW’s outlook on its position within the AI data and business intelligence world could lead to a “much bigger and more profitable” future, and believes “more beat-and-raises are to come.”
Qualcomm hikes its dividend for a 22nd straight year
Qualcomm (QCOM, +1.7%) was another tech stock that closed higher after the chipmaker raised its quarterly dividend by 3.4% to 92 cents per share. The company also said its board of directors approved a new $20 billion stock buyback program, which equates to more than 14% of its current market cap.
QCOM is known as a dependable dividend grower, having increased its quarterly payout for 22 straight years. This has helped it generate a total return (price change plus dividends) of 15% over the past three years, though this is well below the S&P 500’s total return of 76%.
Wall Street, for the most part, doesn’t seem too encouraged by the company’s near-term prospects either. Of the 35 analysts covering QCOM who are tracked by S&P Global Market Intelligence, 11 have it at Buy or Strong Buy, 21 call it a Hold and three say it’s a Sell or Strong Sell. This works out to a consensus Hold recommendation.
Susquehanna analyst Christopher Rolland recently downgraded Qualcomm to Neutral from Positive – the equivalents of Hold and Buy, respectively – citing several near-term headwinds. Among them is the ongoing shortage of memory chips, which impacts the production of smartphones and mobile devices that use QCOM’s Snapdragon processors and is expected to drag on revenue.