US stocks give up afternoon gains, end slightly lower
A choppy day of trading on Wall Street ended with a modest pullback for stocks Wednesday, the latest bout of volatility for the market amid concerns about inflation and uncertainty over whether rising interest rates will help or hinder the economy.
The indexes were on pace for a modest gain before slipping into the red in the final minutes of trading. The S&P 500 dropped 0.1%, with the stocks in the benchmark index about evenly split between gainers and decliners. The Dow Jones Industrial Average gave up 0.2% and the Nasdaq fell 0.1%.
Energy companies helped pull the market lower after the price of U.S. crude oil fell 4%. Technology companies also lost ground, which helped keep gains in health care, real estate and other sectors in check.
Investors closely watched testimony to Congress from Federal Reserve Chair Jerome Powell. He reaffirmed the central bank's determination to raise interest rates and slow inflation.
The choppy trading followed a solid rally on Tuesday in what has been a turbulent period for the broader market, with daily and sometimes hourly swings from sharp gains to losses. The benchmark S&P 500 is currently in a bear market, which means it has dropped more than 20% from its most recent high, which was in January. It has also fallen in 10 of the last 11 weeks, but is holding on to gains so far for this week.
Much of the market's decline has been tied to concerns about rising inflation and the Federal Reserve's plan to aggressively raise interest rates in order to temper inflation's impact on consumers and businesses.
“There have been some new hurdles put in front of us,” said Sylvia Jablonski, chief investment officer at Defiance ETFs. As a result, she said, many investors are “sitting on the sidelines.”
The S&P 500 fell 4.90 points to 3,759.89. The index bounced between a gain of 1% and a loss of 1.3% throughout the day.
The Dow dropped 47.12 points to 30,483.13, while the tech-heavy Nasdaq slipped 16.22 points to 11,053.08.
Smaller company stocks also fell moderately. The Russell 2000 index slid 3.75 points, or 0.2%, to 1,690.28.
Bond yields mostly fell. The yield on the 10-year Treasury note, which helps set mortgage rates, fell to 3.16% from 3.30% late Tuesday. Markets in Europe and Asia also fell.
On Wednesday, Powell underscored the Fed's determination to raise interest rates high enough to slow inflation, a commitment that has fanned concerns that the central bank's fight against surging prices could tip the economy into recession. Powell is addressing Congress this week, starting with the Senate Banking Committee on Wednesday.
“We're not trying to provoke and don't think that we will need to provoke a recession,” Powell said. “But we do think it's absolutely essential that we restore price stability, really for the benefit of the labor market as much as anything else.”
Powell's testimony came a week after the Fed raised its benchmark interest rate by three quarters of a percentage point, its biggest hike in nearly three decades. With inflation worsening, the Fed's policymakers also forecast a more accelerated pace of rate hikes this year and next than they had predicted three months ago, with its key rate reaching 3.8% by the end of 2023. That would be its highest level in 15 years.