S&P 500, Dow Close Lower as Investors Anticipate Fed Rate Signals and Economic Data

The S&P 500 and Dow Jones Industrial Average ended lower as investors pulled back from recent record highs and awaited key economic data and insights on future Federal Reserve interest rate decisions, Reuters reports.

The downturn on Wednesday follows optimism spurred by China’s economic stimulus measures, which had previously lifted markets.

The Dow fell 293.47 points, or 0.70%, closing at 41,914.75, while the S&P 500 lost 10.67 points, or 0.19%, finishing at 5,722.26. The tech-heavy Nasdaq Composite managed a slight gain of 7.68 points, or 0.04%, ending at 18,082.21.

The retreat came after a weak US consumer sentiment report raised concerns about labor market conditions, despite earlier boosts from China’s stimulus package. Investors are now looking to economic indicators such as the weekly jobless claims and the August personal consumption expenditure (PCE) index, both due later this week, for further guidance on the Federal Reserve’s potential rate cuts.

Treasury bond yields rose amid concerns that looser financial conditions could reignite inflation, and the odds of a 50-basis-point rate cut at the Fed’s November meeting increased to 57.4%, according to the CME Group’s FedWatch Tool.

Energy stocks led the losses on the S&P 500, with the sector down 1.9%. However, tech stocks bucked the trend, rising 0.5%, supported by Nvidia’s 2.14% gain. Nine out of 11 S&P 500 sectors closed lower, reflecting a broader sense of caution among investors.

Fed Chair Jerome Powell’s upcoming speech at the New York Treasury Market Conference will be closely watched, as will remarks from Fed Governor Adriana Kugler, expected later in the week.

Amid the mixed market performance, companies like Apple, Citigroup, and Bank of America also faced declines, while Hewlett Packard Enterprise led gains with a 5.14% increase following an upgrade from Barclays.