U.S. stock indexes are holding steadier Wednesday following their worst day in weeks. The S&P 500 was 0.2% higher in morning trading and clawing back a bit of its 0.7% loss from the prior day. The Dow Jones Industrial Average was up 64 points, or 0.2%, and the Nasdaq composite was 0.1% higher.
Quick Read
- Market Stability: U.S. stock indexes showed modest improvements following a significant drop the previous day, with the S&P 500, Dow Jones, and Nasdaq all recording slight gains.
- Company Performances: Cal-Maine Foods saw a 6% increase after reporting higher-than-expected profits due to strong egg sales, while Intel’s shares dropped 6.2% after revealing financial losses in its foundry business.
- Investor Concerns: The stock market’s momentum has decelerated due to concerns that the robust U.S. economy might limit anticipated Federal Reserve interest rate cuts. High stock valuations have also prompted calls for a market correction.
- Federal Reserve Outlook: Despite the Fed’s hints at possible rate cuts, recent economic resilience might delay such actions, as investors await clearer signs of inflation moving towards the Fed’s 2% target.
- Economic Reports: Mixed economic data included a report indicating continued growth in the services sector but at a slower pace than expected, coupled with a report of unexpectedly strong private sector job growth.
- Market Reaction to Data: Investors reacted positively to signs of easing inflation within the services sector, balancing concerns raised by the strong private sector hiring report.
- Interest Rate Speculation: Traders have scaled back their expectations for Fed rate cuts, influenced by recent economic data and concerns about the Fed’s political neutrality as the election approaches.
- Bond Market Movements: Yields on 10-year and 2-year Treasury notes rose, reflecting shifts in market expectations regarding Fed policy.
- Oil Price Impact: Rising oil prices, with U.S. crude nearing 20% growth for the year, contribute to inflationary pressures, complicating the Fed’s interest rate strategy.
- Global Market Response: European markets showed mixed responses to a report of cooling inflation, while Asian markets experienced sharper declines, echoing Wall Street’s previous downturn.
The Associated Press has the story:
Wall Street holds steadier following its worst day in weeks
Newslooks- NEW YORK (AP) —
U.S. stock indexes are holding steadier Wednesday following their worst day in weeks. The S&P 500 was 0.2% higher in morning trading and clawing back a bit of its 0.7% loss from the prior day. The Dow Jones Industrial Average was up 64 points, or 0.2%, and the Nasdaq composite was 0.1% higher.
Cal-Maine Foods rose 6% after reporting stronger profit for the latest quarter than expected by selling a record number of eggs. Intel, meanwhile, sank 6.2% after disclosing financial details about key parts of its business for the first time, including its foundry business, which is losing money.
Stocks have broadly slowed their roll since screaming 26% higher from November through March. Worries are rising that a remarkably resilient U.S. economy could prevent the Federal Reserve from delivering as many cuts to interest rates this year as earlier hoped. Critics have also been saying at least a pullback was overdue after stock prices had grown expensive by several measures.
The Fed has been indicating that it still may cut its main interest rate three times this year. Lowering its main rate from the highest level since 2001 would offer relief to the economy and financial system, while also boosting prices for investments. But Fed officials say they will start cutting only if more evidence arrives to show inflation is heading down toward their goal of 2%.
Several reports on the economy have come in stronger than expected recently. Such strength is encouraging to Wall Street because it means the economy continues to avoid a recession, and it should provide support for corporate profits. But it also could add upward pressure on inflation and discourage the Fed from cutting rates.
Traders took encouragement from a report on Wednesday morning showing that construction, retail and other U.S. services businesses continued to grow last month, but not by as much as economists expected. Perhaps more importantly, the report from the Institute from Supply Management also said that an index of prices paid was at its lowest level since March 2020. That’s an encouraging trend for inflation.
That followed a report from earlier in the morning that showed stronger gains than expected in hiring within the private sector. That report from the ADP Research Institute suggested employers accelerated their hiring last month, when economists were forecasting a slowdown.
A more comprehensive report on the job market for March will arrive from the U.S. government on Friday, and it will likely be the week’s headline economic data.
Traders have already drastically reduced their expectations for how many times the Federal Reserve will cut interest rates this year, halving them from a forecast of six at the start of the year. Some are preparing for two or even zero cuts this year because the Fed may not want to begin lowering rates too close to November’s election out of fear of appearing political.
In the bond market, yields rose to raise the pressure on stocks. The 10-year yield climbed to 4.39% from 4.36% late Tuesday. It trimmed its advance following the cooler-than-expected report on U.S. services businesses.
The two-year yield, which more closely tracks with expectations for Fed action, rose to 4.71% from 4.70%.
A climb in oil prices has also been adding pressure on inflation. A barrel of benchmark U.S. crude climbed again, up 0.9% to $85.78 to bring its gain for the year so far to nearly 20%. Brent crude, the international standard, rose by a similar amount and is up more than 16% so far in 2024.
In stock markets abroad, European indexes were mixed amid modest movements. A report showed that inflation in Europe cooled by more than expected in March, but analysts say that might not be enough to move up the European Central Bank’s first cut to interest rates.
Asian markets fell more sharply earlier in the day, following up on Wall Street’s losses from Tuesday. Indexes fell 1.7% in Seoul, 1% in Tokyo and 1.2% in Hong Kong.
