Small Caps Cheer Dovish Fed, But Nasdaq Turns Volatile – Investor's Business Daily

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The stock market, small caps in particular, liked the sound of a dovish Federal Reserve policy statement Wednesday. The Russell 2000 was up 0.7% in late trading, outperforming the three major stock indexes by a wide margin.

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As expected, the Fed lifted the federal funds rate by a quarter-point to a range of 1.50% to 1.75%. The Fed also signaled two more rate hikes in 2018, while maintaining an accommodative monetary stance. Some bankers, including Goldman Sachs (GS), were looking for three more rate hikes this year. The 10-year Treasury was flat at 2.89% after hitting 2.92% earlier in the session.

Meanwhile, price action in the Dow Jones industrial average, S&P 500 and Nasdaq composite turned bearish late in the session after CNBC reported that Fed Chairman Jerome Powell said trade policy is a growing concern among Fed members. He also said some asset prices are “elevated,” including stocks.

The Dow Jones industrial average was up 0.4% in volatile trading. Shares of Chevron (CVX) outperformed, rising 2%. In the stock market today, oil and gas stocks outperformed as benchmark crude oil jumped 2.5% to $65.11 a barrel after weekly supply data showed a surprise decline in inventories.

The S&P 500 rose 0.3% and the Nasdaq composite added 0.1%. Volume on the NYSE and Nasdaq was tracking close to Tuesday’s levels.

FANG names lagged, except for Facebook (FB), which rebounded 1% after plunging 9% in the prior two sessions. Amazon.com (AMZN), Netflix (NFLX)and Alphabet (GOOGL) showed losses around 0.2%.

IBD 50 growth names were once again in favor as several rose 2% or more. Small-cap Viper Energy Partners (VNOM) reclaimed its 50-day moving average, but not by much, rising nearly 5%.

Meanwhile, Leaderboard name PagSeguro Digital (PAGS), followed through after reversing higher in bullish fashion Tuesday. Shares rose another 4% to 36. The Brazil-based payments processor has been a standout performer after a breakout from an IPO base with a 30.02 buy point.

Fast-growing oil and gas producer Diamondback Energy (FANG) jumped 4% to 130.43. The fast-growing oil and gas production firm with a strong presence in the Permian Basin area of West Texas is vying for a breakout from a cup-with-handle base with a 131.68 buy point. The company has delivered four straight quarters of triple-digit sales growth.

Floor & Decor (FND) extended gains after Tuesday’s powerful breakout over a 48.77 cup-with-handle buy point. Shares were up 3% to 51.20.

Elsewhere,  Salesforce.com (CRM) pared early losses but still fell 2% on news it’s acquiring fellow enterprise software name MuleSoft (MULE) for $6.5 billion in cash and stock. Goldman Sachs brought MuleSoft public a year ago at 17. After soaring 27% Tuesday, shares of MuleSoft were up another 6% Wednesday.

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