Wall Street record levels/ stock market record highs/ S&P 500 near peak/ Newslooks/ NEW YORK/ J. Mansour/ Morning Edition/ U.S. stocks drifted near record highs on Wednesday, with the S&P 500 rising 0.1% after setting its 41st all-time high of the year. Treasury yields remained stable following weak consumer confidence data, which raised expectations of a significant Federal Reserve interest rate cut. Global markets were more muted after strong gains spurred by China’s stimulus measures.
Wall Street Drifts as S&P 500 Holds Near Record Highs: Quick Looks
- The S&P 500 gained 0.1%, nearing its all-time high set Tuesday.
- The Dow Jones Industrial Average and Nasdaq also posted modest gains.
- Treasury yields stabilized after weak consumer confidence data raised expectations of a Fed rate cut.
- Global markets, including China and Europe, moved more modestly after recent strong gains.
- Investors are focused on next week’s U.S. jobs report, amid concerns over slowing hiring.
- The Federal Reserve’s recent rate cut was aimed at easing pressure on the labor market.
- Companies like Cintas posted strong earnings, while Stitch Fix dropped sharply on weak revenue expectations.
- Bond yields remained mostly unchanged, with the 10-year Treasury rising slightly to 3.76%.
Wall Street Drifts as Markets Pause at Records
Deep Look:
Wall Street remained steady on Wednesday, with U.S. stocks drifting around record highs as investors took a pause following strong recent moves. The S&P 500 inched up by 0.1% in early trading, continuing its upward momentum after hitting its 41st all-time high of the year on Tuesday. The Dow Jones Industrial Average rose by 5 points, or less than 0.1%, while the Nasdaq composite added 0.2%.
Treasury yields also held relatively stable in the bond market after falling the previous day due to a surprising drop in U.S. consumer confidence. The confidence report, the weakest in three years, raised concerns about the health of the U.S. economy, but also fueled speculation that the Federal Reserve will make a larger-than-expected interest rate cut at its next meeting. Investors are now anticipating a half-point rate reduction, a bigger move than the typical quarter-point cuts.
In global markets, investors saw smaller gains after an initial boost on hopes that new stimulus measures from China could lift the world’s second-largest economy. While Chinese indexes rose again on Wednesday, they pared their gains later in the day. European indexes dipped modestly, and crude oil prices, which surged earlier in the week, gave back some of their gains as well.
A key date investors are watching is next week’s U.S. jobs report, which could have a significant impact on the market. Slowing job growth has become a primary concern for investors, now that inflation has eased considerably since its peak in 2022. Although layoffs remain low, U.S. employers have shown greater caution in hiring. Critics worry that the labor market could weaken further as the Federal Reserve’s past rate hikes fully impact the economy.
Last week, the Fed pivoted its focus from fighting inflation to protecting the job market by cutting its main interest rate by a larger-than-usual half percentage point, marking its first rate reduction in over a year. The central bank had previously kept interest rates at a two-decade high to cool the economy and tame inflation, but as inflationary pressures subside, the Fed has shifted to preventing economic slowdown.
Among individual stocks, Cintas rose 1.1% after the company reported better-than-expected profits for the latest quarter. The company, which supplies uniforms and other products to businesses, also raised its full-year forecasts for both revenue and profit, benefiting from a resilient job market.
In contrast, Stitch Fix tumbled 34.5% after the online fashion service warned that its quarterly revenue could drop by as much as 17% compared to last year. The company has struggled to regain momentum after its stock peaked at over $100 during the pandemic and has since plummeted to below $3.
Homebuilder KB Home also saw its stock fall by 5.8%, despite reporting quarterly earnings that were just shy of analysts’ expectations. The company noted that orders increased in August as mortgage rates fell, offering some relief in a challenging housing market.
The market’s focus on interest rates also plays into the broader picture of consumer spending, housing, and business investments. Lower rates make borrowing more affordable, whether for mortgages, car loans, or credit card purchases, and could help the economy regain momentum after recent signs of weakening.
In the bond market, the yield on the 10-year Treasury rose to 3.76%, up slightly from 3.73% on Tuesday, while the two-year Treasury yield edged lower to 3.53% from 3.54%. The two-year yield typically moves more closely with expectations for Federal Reserve actions.
Elsewhere in global markets, the Shanghai composite rose by 1.2%, continuing its upward trend thanks to optimism surrounding China’s stimulus measures. South Korea’s market dropped 1.3%, while London’s FTSE 100 slipped by 0.1%, reflecting a more subdued day of trading across Europe.
As markets continue to drift near record levels, investors are keeping a close eye on both economic data and the Federal Reserve’s next moves, which could set the tone for the rest of the year. With inflation easing and the labor market showing signs of strain, the path forward for stocks and bonds remains uncertain but heavily dependent on the Fed’s actions.
