US stocks rose on Wednesday, a day after their worst decline in weeks.
The Standard & Poor's 500 index rose 5.68 points, or 0.1%, to 5,211.49 points. The Dow Jones Industrial Average fell 43.10 points, or 0.1%, to 39,127.14 points, and the Nasdaq Composite Index increased 37.01 points, or 0.2%, to 16,277.46 points.
GE Aerospace helped lead the S&P 500 with a 6.7% jump. It was the company's second day of trading after it spun off its power and energy businesses, marking the end of the General Electric conglomerate. Cal-Maine Foods rose 3.6% after reporting stronger-than-expected fourth-quarter earnings by selling a record number of eggs.
That helped offset an 8.2% decline for Intel, which revealed financial details about key parts of its business for the first time, including its loss-making foundry business. The Walt Disney Company's stock fell 3.1% after shareholders voted against appointing an activist investor to its board of directors who promised changes to the company to raise its stock price. The decline of both companies was a big reason why the Dow Jones lagged behind other indexes.
Stocks have broadly slowed since rising 26% from November through March. Concerns are growing that a remarkably resilient US economy may prevent the Federal Reserve from making as many interest rate cuts this year as it had earlier hoped. Critics also say the decline was at least deserved after stock prices became expensive by several measures.
The Federal Reserve has indicated that it may continue to cut its key interest rate three times this year, which would ease pressure on the economy. But Fed officials say they will do so only if more evidence arrives to show that inflation is trending down toward their 2% target.
Federal Reserve Chairman Jerome Powell reiterated that message in a speech on Wednesday, outlining the risks of cutting interest rates either too early or too late. “Given the strength of the economy and the progress on inflation to date, we have time to let incoming data guide our policy decisions,” he said.
What has worried Wall Street is a series of reports showing that the economy remains stronger than expected. This is encouraging because it means the economy continues to avoid recession, and should provide support to corporate profits. But it could also add upward pressure on inflation and discourage the Fed from cutting interest rates.
Markets were encouraged by a report released Wednesday morning that showed growth in the construction, retail and other U.S. corporate sectors slowed last month. The report from the Institute for Supply Management also said the prices paid index was at its lowest level since March 2020, an encouraging trend for inflation.
That calmed Wall Street's nerves after a report earlier in the morning that markets were finding more frustration. He pointed to stronger-than-expected gains in employment within the private sector. This report from the ADP Research Institute said that employers accelerated their hiring process last month, when economists were expecting a slowdown.
A more comprehensive report on the labor market for March will arrive from the US government on Friday, and will likely be the main economic data of the week.
Traders have already significantly lowered their expectations for how many times the Fed will cut interest rates this year, halving it from its forecast of six at the start of the year. This puts them on the same page with Fed officials generally. However, some investors are preparing for two or even zero cuts this year because the Fed may not want to start cutting interest rates too close to the November election for fear of appearing political.
But the Fed's Powell said on Wednesday that the central bank has independence that “enables and requires us to make our monetary policy decisions without regard to short-term political questions.”
In the bond market, Treasury yields fell. The 10-year bond yield fell to 4.34% from 4.36% late Tuesday. The two-year yield, which closely matches expectations for Fed action, fell to 4.67% from 4.70%.
In overseas stock markets, European indices rose modestly. A report showed that inflation in Europe slowed more than expected in March, but analysts say that may not be enough to trigger the European Central Bank's first interest rate cut.
Asian markets fell more sharply earlier in the day, following up on losses on Wall Street on Tuesday. Indices fell by 1.7% in Seoul, 1% in Tokyo, and 1.2% in Hong Kong.
Choi writes for the Associated Press. AP writers Christopher Rugaber, Yuri Kajiyama and Matt Ott contributed to this report.
