Stan Cho, Associated Press
13 minutes ago
People walk in front of the New York Stock Exchange on Wednesday, April 3, 2024 in New York. Healthcare business Solventum began trading on the New York Stock Exchange on Wednesday. (AP Photo/Peter Morgan)
NEW YORK (AP) — U.S. stocks were mostly higher Wednesday as Wall Street bounced back from its worst day in weeks.
The S&P 500 rose 0.2% in late trading, reversing some of its losses from the previous day. With one hour left in trading, the Dow Jones Industrial Average was down 23 points, or 0.1%, and the Nasdaq Composite Index was up 0.4%.
GE Aerospace soared 7.2%, the biggest gainer in the S&P 500. This is 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 4.1% after reporting better-than-expected profits for its latest quarter after selling a record number of eggs.
These helped offset a 7.5% 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. fell 2.6% after shareholders voted against adding an activist investor to the company’s board who had promised to transform the company to boost its stock price.
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. Chairman Jerome Powell reiterated that message in his Wednesday speech, detailing the risks of cutting rates too soon or too late.
Wall Street is concerned about a series of reports showing the economy is still stronger than expected. Of course, that’s encouraging because 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 construction, retail and other U.S. services continued to grow last month, but not as much as economists had expected. 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.
Some investors are preparing 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 Fed has independence that “allows and requires it to make monetary policy decisions without considering short-term political issues.” That could signal a potential move that some may find uncomfortable closer to the election.
Yields have fallen in the bond market. The yield on the 10-year Treasury note fell to 4.35% 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%.
In overseas stock markets, European indexes were mixed, with small movements. European inflation slowed more than expected in March, according to a report, but analysts say that may not be enough to prompt the European Central Bank to lift its first interest rate cut. .
Asian markets fell more sharply earlier in the day, following Wall Street’s decline from Tuesday. The index fell 1.7% in Seoul, 1% in Tokyo and 1.2% in Hong Kong.
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Associated Press writers Christopher Rugaber, Yuri Kageyama and Matt Ott contributed.
