By Johann M. Cherian and Purvi Agrawal
(Reuters) – Wall Street’s main indexes were mixed on Wednesday, with the index nearing a record high, as investors awaited more clues on the state of the economy and the next interest rate cut.
The three main U.S. economic indicators rose to post monthly gains after the Federal Reserve cut interest rates, raising expectations of a soft landing. But a weak report on consumer sentiment on Tuesday raised some caution about the health of the labor market.
Yields on long-term U.S. Treasury bonds rose amid concerns that easing financial conditions could reignite inflation.
The odds of a 50 basis point interest rate cut by the central bank at its November meeting have risen to 57.4%, following the coin flip earlier in the week, according to the CME Group (NASDAQ:) FedWatch tool.
“The Fed itself is suggesting additional cuts this year and into 2025, but the market is certainly pricing in a more aggressive rate-cutting regime,” said Scott Welch, chief investment officer at Certiute.
The S&P 500 index fell 0.01 points, or 0.26%, to 5,732.92 at 11:42 a.m. local time, lost 202.11 points, or 0.48%, to 42,006.11, and lost 47.87 points, or 0.26%, to 18,122.39.
Six of the 11 sectors in the S&P 500 fell, led by energy stocks. Technology stocks bucked the trend, helped by a 3% gain in Nvidia (NASDAQ:)
The Dow Jones Industrial Average fell after hitting record highs, dragged down by a 4.8% drop in Amgen (NASDAQ:AMGEN) after the drugmaker reported mixed data on two drugs, raising competition concerns.
The S&P 500 and the tech-heavy Nasdaq have both gained about 20% so far this year on expectations of lower interest rates and optimism about artificial intelligence. However, the S&P 500 is trading at valuations that are above long-term averages.
“The market has gone up a lot and we may be reaching valuation levels where people start to get uncomfortable,” Welch added.
On the data side, sales of new single-family homes in the United States fell in August, but lower mortgage rates and home prices could spur demand in the coming months.
However, the main focus will be on weekly jobless claims and the August personal consumption expenditure index, due later in the week.
Fed Governor Adriana Kogler’s comments, due after the markets close, will also be analyzed, but the focus will be on Fed Chairman Jerome Powell’s speech at the Treasury Markets Conference in New York on Thursday.
Among other companies, Apple (NASDAQ:AAPL) fell 0.7%. Sales of foreign-brand smartphones, including iPhones, in China fell in August from a year earlier, data from a government-affiliated research firm showed.
Shares of Citigroup, Bank of America and JPMorgan Chase weighed on the broader banking index, which fell 1.2%.
Shares of KB Home (NYSE: KBH) fell 4% after reporting disappointing third-quarter earnings.
Hewlett Packard Enterprise (NYSE:HPE) led the S&P 500 with a gain of 4.8% after Barclays upgraded its credit rating.
Ford (NYSE:) shares fell 4.3% and General Motors (NYSE:) shares fell 5.3% to hit the lowest level in the benchmark index after Morgan Stanley cut its recommendations on the automakers.
Declining issues outnumbered advancing issues by a ratio of 1.69 to 1 on the NYSE and 1.65 to 1 on the Nasdaq.
The S&P 500 recorded 34 new 52-week highs and one new low, while the Nasdaq Composite recorded 55 new highs and 57 new lows.