The market has internalized many forms of inflation: Barclays' Gapen

Michael Gapen, chief U.S. economist at Barclay’s, joins ‘Closing Bell’ with his predictions for the Federal Reserve’s rate hike timeline. For access to live and exclusive video from CNBC subscribe to CNBC PRO: https://cnb.cx/2NGeIvi

U.S. stocks pushed modestly higher on Wednesday as the recent jump in bond yields took a breather, allowing tech stocks to recover.

The S&P 500 ticked up 0.23% to close at 4,701.46, while the tech-heavy Nasdaq Composite added 0.44% to finish at 15,845.23. The Dow Jones Industrial Average lost just 9.42 points and settled at 35,804.38.

The recent rise in yields, which started around President Joe Biden’s decision to renominate Jerome Powell as chairman of the Federal Reserve on Monday, cooled slightly on Wednesday. The 10-year Treasury yield has traded above 1.68% this week after ending Friday at 1.55%. However, the benchmark rate had dipped to about 1.64% on Wednesday afternoon.

Shares of Facebook-parent Meta rose 1.1% to bolster the Nasdaq, while Roku and Peloton shook off rough starts to the week to rise more than 2% each. Computer hardware company HP’s shares got a 10.1% lift after reporting earnings that beat on the top and bottom lines and issuing higher first-quarter earnings guidance.

The move in rates earlier this week sent investors fleeing from tech and growth shares, while boosting some bank stocks and energy shares. The divided market has left the Dow in the green for the week so far, the S&P 500 up just incrementally, and the Nasdaq Composite down 1.3%, even with Wednesday’s move.

“It’s certainly a story of more rotation,” said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management. “The market is now — with the Powell renomination — thinking this is a reopening story, which sets aside any of the risks or concerns we might have about rising Covid infection rates.”

The meetings from the latest Fed meeting, released on Wednesday, showed that the central bankers were ready to accelerate the timetable for slowing asset purchases and raising the benchmark funds rate if inflation remains high. Stocks moved lower after the minutes were released.

The market did receive some bullish news on the economic front. Initial jobless claims for the prior week came in at 199,000, the lowest level in more than 50 years. GDP growth for the third quarter was revised up slightly to 2.1%, though economists expected it to rise to 2.2%. Personal income and consumer spending both rose more than expected in October.

The data was not uniformly positive, however, as durable goods orders showed an unexpected decline in October, according to the Census Bureau. Core personal consumption expenditures, the Fed’s preferred inflation measure, was up 4.1% year over year for October, matching estimates.

Following those data releases, the Atlanta Fed’s GDPNow tracker for fourth-quarter growth rose to 8.6% from 8.2%.

Earnings reports drove some of the biggest individual moves on Wednesday, as traditional retail stocks took a hit following poor quarterly results. Gap lost 24% and Nordstrom tumbled about 29%. Both companies reported earnings misses for the most recent quarter.

“A strong consumer and pent-up demand was supposed to make this a strong holiday season for retail, but margin and wage pressures are disrupting many retailer outlooks,” Ed Moya, senior market analyst at Oanda, said in a note to clients.

Elsewhere, software stock Autodesk fell 15.4% after the company issued disappointing fourth-quarter guidance.

Rising Covid cases in Europe continued to worry investors. Germany was considering a full Covid lockdown.

U.S. markets are closed Thursday for Thanksgiving and will close early on Friday in a shortened session.

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