U.S. stocks ended lower on Wednesday, as fresh economic data cast doubt on inflation which is making significant progress toward the Federal Reserve’s 2% target in October.
The Dow Jones Industrial Average fell 138.25 points, or 0.31%, to 44,722.06. The S&P 500 sank 22.89 points, or 0.38%, to 5,998.74. The Nasdaq Composite Index shed 115.10 points, or 0.60%, to 19,060.48.
Seven of the 11 primary S&P 500 sectors ended in red, with technology and consumer discretionary leading the laggards by losing 1.19% and 0.69%, respectively. Meanwhile, real estate and health led the gainers by going up 0.67% and 0.47%, respectively.
The Fed’s preferred inflation gauge, the core personal consumption expenditures (PCE) index, showed a monthly increase of 0.3%, consistent with September’s pace and Wall Street’s expectations. On an annual basis, core prices rose 2.8%, slightly above September’s 2.7%, suggesting that progress in curbing inflation has slowed.
The latest inflation reading has sparked uncertainty regarding the Fed’s next steps. According to the CME FedWatch Tool, traders now see a 34% chance that the Fed will hold rates steady at its December meeting, up from 24% a month ago.
In other economic updates, the second estimate of third-quarter gross domestic product confirmed the U.S. economy grew at an annualized rate of 2.8%, unchanged from the prior estimate. Meanwhile, the U.S. weekly jobless claims continued to show strength in the labor market, with 213,000 claims filed in the week ending November 23, a slight decline from the previous week’s 215,000.
“We are in a ‘low-hire, low-fire’ environment,” Bank of America’s lead economist Aditya Bhave said on Tuesday. “In the spring of 2022, there were two open jobs for every unemployed person. Now that figure is just a little more than one. In other words, there aren’t as many opportunities out there.”
Meanwhile, the average 30-year mortgage rate in the United States edged down to 6.81% this week, a minor decline from 6.84% the previous week, according to recent data. This marks the fourth consecutive week that the benchmark rate has hovered in the 6.8% range, providing a degree of stability for prospective homebuyers and refinancers.
“Rates have been relatively flat over the last few weeks as the market waits for more clarity on specific economic policies,” Sam Khater, Freddie Mac’s chief economist, said in a statement.
On the corporate front, Nvidia shares dropped 1.15% on Wednesday, continuing a downward trend that has seen the artificial intelligence chip giant’s stock fall 9.36% over the past five days. The selloff comes as investors weigh the company’s latest quarterly earnings report, which hinted at slower revenue growth despite strong profitability.
Other tech companies also faced pressure, with Dell Technologies sinking 12.25% after its earnings release disappointed investors. The decline highlights growing concerns around demand in the broader tech sector. The U.S. markets will pause for Thanksgiving on Thursday, with trading resuming on Friday in a shortened session. (Xinhua)