Stocks fluctuated on Wednesday and interest rates fell as investors digested reports of major economic data that showed little change in the strength of the US economy amid the Federal Reserve raising interest rates to tame inflation.
The Dow Jones Industrial Average fell 35 points, or 0.11%, retracing previous gains after two economic reports. The S&P 500 and Nasdaq Composite Indexes also reversed increases, falling 0.02% and 0.32%, respectively. Microsoft shares fell more than 5% after a UBS downgrade, weighing on the broader market.
The November Job Openings and Labor Turnover, or JOLTS, came in slightly better than expected, indicating continued labor market strength. The ISM manufacturing index was almost inline in December.
US stocks started 2023 on a downbeat note on Tuesday as rising concerns about interest rates, soaring inflation and fears of a recession crushed hopes that Wall Street would start the new year on a positive note. The S&P 500 and Nasdaq Composite lost 0.4% and 0.8%, respectively, while the Dow closed below break-even. Major indices were also pressured by sharp falls in Apple and Tesla stocks.
“US stocks were unable to hold on to previous gains as restrictive policy and recession fears remained front and center for investors,” Ed Moya, chief market analyst at Oanda, wrote in a note to clients on Tuesday. “Discount buying led to another bear market recovery that didn’t last long at all.”
Investors will gain more insight into what Fed members are thinking on Wednesday afternoon as minutes from the central bank’s latest policy meeting are released. Earlier in the day, the Employment Opportunity and Employment Turnover Survey, or JOLTS, and ISM manufacturing data are due.
The December jobs report will also be closely watched as it is the last reading of the labor market before the Federal Reserve meeting in February.
“It’s too early to start betting on the Fed’s pivot this year and that would make this a challenging environment for equities,” Moya said.
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