A wobbly day on Wall Street ended with a modest retreat for stocks on Wednesday as investors weighed a report showing inflation remains very hot, potentially paving the way for more aggressive rate hikes from the Federal Reserve.
A late-afternoon drop erased temporary gains that the major stock indexes had clung to for much of the day. The S&P 500 closed 0.3% lower, its sixth straight loss. The Dow Jones industrial average and the Nasdaq composite fell 0.1 percent.
Bond yields, which have driven much of Wall Street’s recent trading, closed lower. The yield on the 10-year note, which measures mortgage rates, fell to 3.90 percent from 3.95 percent late Tuesday. The yield on the two-year bond fell to 4.28% from 4.30%.
The market remained volatile following the afternoon release of the minutes from the Fed’s latest rate policy meeting. The minutes underlined the central bank’s commitment to taming “unacceptably high” inflation. At the end of that meeting last month, the Fed announced a strong rate hike and signaled more big rate hikes to come.
“The Fed’s minutes didn’t contain much new information, but they reiterated their intention to err on the side of doing too much, rather than too little,” said Chris Zaccarelli, chief investment officer at the Independent Advisor Alliance.
The S&P 500 fell 11.81 points to 3,577.03. The benchmark has fallen about 25% so far this year and is nearing its lowest point in nearly two years.
The Dow fell 28.34 points to 29,210.85, while the Nasdaq composite fell 9.09 points to 10,417.10. The indices are moving on pace for a weekly loss.
Utilities, technology companies and health-care stocks weighed on the market, keeping gains elsewhere in check. Duke Energy fell 4%, Texas Instruments fell 1.2% and Abbott Laboratories closed 1.6% lower.
PepsiCo rose 4.2% after raising its profit guidance for the year following encouraging quarterly financial results.
Cruise line operators were among the biggest gainers in the S&P 500. Carnival rose 10.1%, Norwegian Cruise Line gained 11.6% and Royal Caribbean climbed 11.5%.
Shares of smaller companies also lost ground. The Russell 2000 fell 5.15 points, or 0.3%, to 1,687.76.
Markets have been volatile all week as investors await the latest round of major company earnings reports and new reports on inflation and retail sales.
A government report showed that wholesale inflation eased last month, although it was slightly worse than economists had expected. A more cautious component of the inflation data matched economists’ forecasts.
Inflation updates are closely watched by investors who worry that stubbornly high prices could lead to a recession. These concerns have been exacerbated by central banks around the world raising interest rates to make borrowing more expensive and slow economic growth.
The Federal Reserve has been particularly aggressive, and its strategy risks stalling an already slowing economy and triggering a recession.
In minutes from the central bank’s September 20-21 meeting, Fed policymakers judged that a “shrinking of the labor market” – possibly including higher unemployment – would be needed to curb inflationary pressures in the country. They noted that hiring remained “robust,” which is fueling high inflation as wages rise sharply.
A closely watched consumer prices report is due on Thursday and retail sales data for September is due on Friday. Both reports could help give Wall Street a clearer picture of where higher prices remain and how consumers are reacting.
Corporate earnings season begins in earnest this week. Domino’s Pizza and Walgreens will report results on Thursday. Major banks, including Citigroup and JPMorgan Chase, will report results on Friday.
The British pound fell against the US dollar after Bank of England Governor Andrew Bailey confirmed the bank would not extend beyond Friday an emergency debt-buying plan introduced last month to stabilize financial markets.
Markets in Europe fell mainly.
The US dollar is strengthening against other currencies amid heightened recession fears. The Japanese yen fell to a 24-year low against the dollar, raising expectations for intervention to bolster the yen after such a move in September.