U.S. stock indexes lost early gains on Wednesday, at the start of a new month of trading, after data on the manufacturing sector showed rising costs were still a problem, as the Federal Reserve begins reducing its nearly $9 trillion balance sheet.
How are stock indexs trading?
- The Dow Jones Industrial Average DJIA, -0.60% lost 213 points, or 0.7%, to 32,771.
- The S&P 500 SPX, -0.73% were down 28 points, or 0.7%, to 4,104
- The Nasdaq Composite COMP, -0.79% declined 31.5 points, or 0.3%, to 12,049
On Tuesday, the Dow industrials DJIA, -0.60% fell 222.84 points, or 0.7%, to close at 32,990.12, snapping six-straight sessions of wins. The S&P 500 SPX, -0.73% fell 0.6% to 4,132.15, and the Nasdaq Composite COMP, -0.79% finished down 0.4% at 12,081.39, with both indexes snapping three consecutive days of gains.
What’s driving the market?
It’s a economic data-heavy day. The Institute for Supply Management’s Manufacturing PMI, a closely followed index of U.S.-based manufacturing activity, rose to 56.1% in May from 55.4% in the prior month, the research group said Wednesday. Economists polled by The Wall Street Journal had forecast a decline to 54.5%.
Meanwhile, U.S. job openings fell to 11.4 million in April from a record 11.9 million in the previous month. About 4.4 million workers quit jobs in April, while the job-quitting rate stayed unchanged at 2.9%.
“Everything is showing that the economy is still doing pretty well. And that is supporting the idea that the Fed could continue with this aggressive tightening path, which is probably why we’re seeing stocks turned negative here,” Edward Moya, senior market analyst at OANDA, said in an interview.
Investors are also expecting St. Louis Fed President James Bullard to speak at 1 p.m. ET and the Fed to publish its Beige Book on economic conditions later in the session.
As well, investors will be keeping an eye on the liquidity impact of shrinking of the Fed’s massive balance sheet, which starts Wednesday and is aimed in part at helping fight high inflation.
“Uncertainty over the impact of Fed QT that kicks off today and ramps up to full force over the next three months to a pace of $95 billion/month could also prove a factor weighing on sentiment,” according to a note by Saxo Bank strategists.
U.S. Treasury Secretary Janet Yellen admitted in an interview Tuesday that she was “wrong” last year in believing U.S. inflation would not pose a long-term problem, but President Joe Biden said he would leave it to the Fed to solve the inflation problem.
Elsewhere, Atlanta Fed President Raphael Bostic told MarketWatch in an exclusive interview on Tuesday that any September “pause” in the central bank’s push to raise interest rates shouldn’t be construed as a “Fed put,” or sign that the central bank will come to the rescue of markets.
Earnings reports after the market close are expected from meme stock GameStop Corp. GME, -3.83%, pet products retailer Chewy Inc. CHWY, -5.48%, and on the tech side, NetApp Inc. NTAP, +0.76% and Hewlett Packard Enterprise Co. HPE, +1.23%
The yield on the 10-year Treasury TMUBMUSD10Y, 2.944% note rose 8.2 basis points to 2.922% on Wednesday, according to Dow Jones Market Data.
U.S. crude oil prices CL.1, +1.65% were up another 1.6% to $117.40 a barrel and international benchmark Brent BRN00, +1.66% rose 1.6% to $117.50. Oil prices rose Tuesday after the EU slapped new sanctions on Russian crude, but pulled back after The Wall Street Journal reported some members of the OPEC were considering suspending Russia from oil-production targets.
What companies are in focus?
- Salesforce Inc. stock CRM, +10.23% jumped 12.6% after the cloud-based customer-relationship-management company hiked its earnings forecasts.
- Capri Holdings Ltd. CPRI, +2.26% stock rose 2.7% after the luxury fashion company reported a big earnings beat and $1 billion buyback program.
- HP Inc. HPQ, +3.50% shares gained 1.9% after it posted another strong quarter of personal computer sales and raised its earnings outlook Tuesday.
- Adamis Pharmaceuticals Corp ADMP, -9.26%. shares edged up 0.1% after a panel recommended a Covid-19 study continue.
- Delta Airlines DAL, -4.07% lost 4%, despite that the company raised its revenue forecast as travel recovers from the pandemic.
How are other assets trading?
- The ICE U.S. Dollar Index DXY, +0.80%, a measure of the currency against a basket of six major rivals, was up 0.6%.
- Bitcoin BTCUSD, -0.81% was trading about 2% lower at $31,009.
- Gold for August delivery GC00, +0.07% GCQ22, +0.07% fell 0.2% to $1,844.90 an ounce.
- In European equities, the Stoxx Europe 600 SXXP, -1.04% fell 0.8% and London’s FTSE 100 UKX, -0.98% edged down 0.7%.
- In Asia, the Shanghai Composite SHCOMP, -0.13% closed down 0.1%, the Hang Seng Index HSI, -0.56% fell 0.6% in Hong Kong, and Japan’s Nikkei 225 NIK, +0.65% rose 0.7%.