NEW YORK — U.S. stocks held steady on Wednesday, a day after their worst decline in weeks.
The S&P 500 index rose 5.68 points, or 0.1%, to 5,211.49. The Dow Jones Industrial Average fell $43.10, or 0.1%, to $39,127.14, and the Nasdaq Composite Index rose $37.01, or 0.2%, to close at $16,277.46.
GE Aerospace stock rose 6.7% to lead the S&P 500. It was the company’s second day of trading since it separated its power and energy business to mark the end of the General Electric conglomerate. Calmaine Foods rose 3.6% after reporting better-than-expected profits for its latest quarter after selling a record number of eggs.
These helped offset an 8.2% decline in Intel, which for the first time disclosed financial details for key parts of its business, including its loss-making foundry business. Walt Disney Co.’s stock price fell 3.1% after shareholders voted against appointing an activist investor to the company’s board of directors who had promised to bring about changes at the company to boost its stock price. This pair’s decline was a major reason why the Dow lagged behind other indexes.
Stock prices have generally slowed their rise since rising 26% from November to March. The strong recovery in the U.S. economy has raised concerns that the Federal Reserve will not be able to cut interest rates as much this year as originally hoped. Critics also argue that, at the very least, the pullback was premature, as the stock has become overvalued by many measures.
The Fed has indicated it may cut its key interest rate three more times this year to ease pressure on the economy. But Fed officials have said they will only do so if they see further evidence that inflation is falling toward their 2% goal.
Wall Street is concerned about a series of reports showing the economy is still stronger than expected. This is encouraging as it means the economy continues to avoid recession, which should support corporate profits. But it could also increase upward pressure on inflation and deter the Fed from cutting rates.
Markets were encouraged by a report Wednesday morning showing growth in construction, retail and other U.S. services slowed last month. The Institute for Supply Management’s report also said the price paid index was at its lowest level since March 2020, an encouraging trend for inflation.
Morning reports that the market was further depressed calmed nerves on Wall Street. It suggested that employment in the private sector rose more than expected. Employers accelerated hiring last month, when economists were predicting an economic slowdown, according to a report from the ADP Institute.
A more comprehensive report on the March job market is expected to be released by the U.S. government on Friday, and is likely to be the main economic indicator this week.
Traders have already sharply lowered their expectations for how many rate cuts the U.S. Federal Reserve will cut this year, halving them from the six they expected at the start of the year. As such, they are generally on the same page as Fed officials. But some investors are bracing for two or no rate cuts this year, as the Fed may not want to start cutting rates too close to the November election for fear of being seen as political.
But Fed Chairman Jerome Powell said Wednesday that the central bank has independence that “enables and requires it to make monetary policy decisions without considering short-term political issues.”
In the bond market, US Treasury yields fell. The yield on the 10-year Treasury note fell to 4.34% from 4.36% late Tuesday. The yield on the two-year note, which is more closely tied to Fed expectations, fell to 4.67% from 4.70%.
