Listless day ends with indexes mixed

Last week’s message on rates from Fed still has investors nervous

A listless day on Wall Street ended with indexes mixed on Wednesday, as nervousness continues to wash out of the market following last week’s jolt by the Federal Reserve.

The S&P 500 slipped 4.60 points, or 0.1 percent, to 4,241.84 after earlier meandering between very modest gains and losses. It’s 0.3 percent below its record high set a week and a half ago.

The Dow Jones Industrial Average fell 71.34, or 0.2 percent, to 33,874.24, while the Nasdaq composite added to its record set a day before. It inched up by 18.46, or 0.1 percent, to 14,271.73.

The majority of stocks in the S&P 500 fell, but gains for financial companies and others that do best when the economy is healthy limited the losses.

Markets have calmed notably since the Federal Reserve surprised investors last week by saying it could start raising

short-term interest rates by late 2023, earlier than expected.

The super-low rates the Fed has engineered to carry the economy through the pandemic have made investing easy for more than a year. They’ve propped up prices across markets, and any change would be a big deal. That’s why the Fed’s announcement triggered an immediate drop for stocks and rise in Treasury yields.

But since then, investors have focused more on how it may be still be years before the first rate hike hits, particularly as Fed officials continue to say they see the high inflation sweeping the economy being only a temporary problem.

Before the Fed raises rates for the first time since 2018, it will likely first have to check off several items, investment giant Capital Group said in a recent report. First, the Fed will announce it will reduce the bond purchases it’s making to keep longer-term interest rates low. Then it will begin tapering, before ending tapering and then signaling a rate hike is coming.

“That schedule will take time, and Fed officials have made it clear that they will remain patient,” said Capital Group, which runs American Funds, in its midyear outlook.