The S&P 500 edged up modestly on Wednesday as traders gauged the potential for future Federal Reserve rate cuts amid continued inflationary pressures.
The broad market index added 0.16% to close at 5,918.25, while the Nasdaq Composite slipped 0.06% to 19,478.88. The Dow Jones Industrial Average was better, rising 106.84 points, or 0.25%, to end at 42,635.20. The three major averages are on pace for a second straight weekly loss.
Minutes released from the Fed’s December meeting reflected that nearly all board participants found risks to the inflation outlook had increased, raising investor concerns that there may be fewer rate cuts this year than expected.
“Discussing the outlook for monetary policy, participants indicated that the Board is at or near the point where it would be appropriate to slow the pace of policy easing,” the minutes said.
Bond yields, which have been rising on bets that President-elect Donald Trump’s tariff and tax plans could lead to a spike in inflation, fluctuated during trading on Wednesday, SEEbiz reports. The rate on the benchmark 10-year government bond at one point exceeded 4.7%, approaching levels last seen in late April.
After sifting through a slew of economic data this week, investors are now awaiting Friday’s December wages report.
“Forecasters are finding it increasingly difficult to model the path for interest rates, growth and inflation because of the uncertainty surrounding Trump’s still-evolving policies,” said Jeffrey Roach, chief economist for LPL Financial. “Markets could become volatile if there is a surprise in Friday’s earnings release.”
Palantir — one of the S&P 500’s biggest gainers in 2024, up more than 340% — fell for a third straight day, losing 2.5%. The chipmaker’s advanced micro devices fell 4.3% after a downgrade by HSBC.
