Trading is mixed a day after drop
NEW YORK – Stocks stalled in mixed trading on Wednesday, a day after falling to their worst loss since December, as Wall Street prepares for interest rates to stay higher for longer.
The S&P 500 dipped 0.2% after drifting between small gains and losses through the day. The Dow Jones Industrial Average slipped 84 points, or 0.3%, while the Nasdaq composite edged up by 0.1%.
After leaping at the start of the year, stocks have hit a wall in February on worries that inflation may not be cooling as quickly or as smoothly as hoped. That has Wall Street upping its forecasts for how high the Federal Reserve will take interest rates, as well as for how long it will keep them at that level.
Minutes from the central bank’s last meeting showed policymakers still think inflation is too high and rates need to rise further. “A few” officials even said they preferred raising rates by 0.50 percentage points at its last meeting, double the size of what the Fed actually did.
And that discussion came before a slew of stronger-than-expected reports arrived on the economy that could raise the pressure further on inflation.
The disappearing hopes for a rate cut this year, along with rising expectations for how high rates will ultimately go, have dragged down the S&P 500’s gain for the year to 3.9%. Earlier this year, it was up as much as 8.9%.
The Fed’s next move on rates will be next month. Traders see a roughly 3 in 4 chance that the Fed will raise rates by 0.25 points, according to CME Group. They see a 27% chance of a hike of 0.50 points.
A relatively lackluster earnings reporting season for big U.S. companies is winding down, and some of Wednesday’s biggest losers dropped despite reporting better results for the latest quarter than expected.
That’s because investors have been putting more emphasis on what companies say about their upcoming results, with worries high about rising costs and inflation eating into profits.
Charles River Laboratories dropped 10.1% despite topping forecasts for the latest quarter. It said it received a U.S. Justice Department subpoena related to shipments of non-human primates that the company received from its supplier in Cambodia. The company said it voluntarily suspended such shipments, which pushed it to cut its forecast for revenue this upcoming year.
Keysight Technologies tumbled 12.7% for the largest loss in the S&P 500 despite also reporting stronger profit and revenue for the latest quarter than expected. Analysts pointed to its reporting of softer orders than forecast.
On the winning side was Diamondback Energy, which rose 2.3% after it reported a stronger profit for its latest quarter than analysts expected.
All told, the S&P 500 dipped 6.29 points to 3,991.05. The Dow lost 84.50 to 33,045.09, and the Nasdaq gained 14.77 to 11,507.07.
Gold for April delivery fell $1 to $1,841.50 an ounce. Silver for March delivery fell 21 cents to $21.68 an ounce, and March copper fell 4 cents to $4.19 a pound.
The dollar fell to 134.95 Japanese yen from 134.99 yen. The euro fell to $1.0601 from $1.0650.