NEW YORK (Reuters) – U.S. stocks fell on Wednesday as a strong upward revision in gross domestic product eased recession fears, while comments from Federal Reserve officials raised questions about the duration of the central bank’s restrictive policy ahead of inflation data scheduled for release in… Early Thursday.
The Nasdaq joined the S&P 500 in negative territory, while the Dow Jones finished essentially flat.
Despite the weak movement of the indices over the past three sessions, November was a great month. The S&P 500 is still on track for its biggest monthly percentage gain since July 2022.
“The market has had huge returns, so there is definitely profit-taking and repositioning, and there is some consolidation going on here,” said Tim Gresky, chief portfolio strategist at Ingalls & Snyder in New York. “We’ve had very strong earnings and there’s a lot of optimism. Because of that, there’s been a realignment of gains.”
In contrast to Barkin, Fed Governor Christopher Waller, widely considered a hawk, offered reassurances on Tuesday that the Fed may have reached the end of its rate-hiking cycle. He hinted at the possibility of lowering interest rates in the near term to engineer a “soft landing” and avoid a recession.
“The Fed is on hold now, but the slogan remains higher for a while longer,” Gresky added. “The economy remains relatively strong and there is no reason for the Fed to cut interest rates and risk a resurgence in inflation.”
In fact, Cleveland Fed President Loretta Mester on Wednesday emphasized the central bank’s need to remain “nimble” in its response to economic data.
Earlier in the session, the Commerce Department revised its preliminary estimate for third-quarter gross domestic product upward, underscoring the resilience of the U.S. economy but also appearing to give the Fed little reason to start cutting interest rates in the near future, as long as inflation remains much higher. Its target is 2%.
The Fed’s Beige Book, which provides a region-by-region snapshot of the US economy, was released in the mid-afternoon, showing that economic activity has slowed modestly under the central bank’s restrictive monetary policy.
Unofficially, the Dow Jones Industrial Average rose 13.84 points, or 0.04%, to 35,430.82 points, the S&P 500 lost 4.25 points, or 0.09%, to 4,550.64 points, and the Nasdaq Composite index fell 23.27 points. Or 0.16% to 14258.49.
Momentum stocks were sensitive to interest rates, led by Microsoft Corp (MSFT.O) and Apple Inc (AAPL.O) with the heaviest weight in the S&P 500.
Shares of Humana Inc (HUM.N) and Cigna Group (CI.N) fell sharply after a source familiar with the matter said the health insurers were in talks to merge.
Shares of General Motors (GM.N) jumped after the automaker announced a $10 billion stock buyback and a 33% dividend increase. Shares of Ford Motor Co (FN) also rose.
Shares of CrowdStrike Holdings (CRWD.O) rose after its fourth-quarter revenue forecast beat consensus.
NetApp (NTAP.O) jumped after the cloud data management platform increased its annual profit forecast.
Steven Kolb reports. (Additional reporting by Shristi Achar A and Amruta Khandekar in Bengaluru – Preparing by Nancy for the Arabic Bulletin) Editing by Richard Chang
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