NEW YORK (AP) — Stocks gave up early gains and fell in midday trading on Wall Street Wednesday as investors review the latest updates on retail sales, inflation and company earnings.
The S&P 500 fell 0.8% as of 11:41 a.m. Eastern. The benchmark index rose as much as 0.6% earlier in trading. The Dow Jones Industrial Average fell 338 points, or 1%, to 33,567 and the Nasdaq fell 0.7%.
Trading has been unsteady so far this week following two solid weekly gains for the broader market.
Technology stocks were among the heaviest weights on the market. Microsoft fell 1.4% after it became the latest technology company to announce layoffs. The software giant is cutting 10,000 workers or almost 5% of its workforce.
Treasury yields were lower after the government reported that Americans cut back on their spending more than anticipated last month, the second straight decline. The government also reported more encouraging inflation data. Wholesale prices rose 6.2% in December from a year earlier, a sixth straight slowdown for the measure of prices before they are passed along to consumers.
Wall Street has been hoping that easing inflation and a slowdown in economic growth might influence the Federal Reserve's position on interest rates. The central bank aggressively raised rates throughout 2022 in an effort to cool hot inflation, but that has hurt prices of stocks and bonds, and risks going too far and bringing on a recession.
The yield on the two-year Treasury, which tracks expectations for future Fed action, fell to 4.11% from about 4.16% just before the latest economic data was released. It was as high as 4.21% late Tuesday.
“The appearances are that it looks like something is moving inflation and retail sales in the right direction, which is to say softer,” said Tom Martin, senior portfolio manager at Globalt Investments. “The question is, what does it really mean.”
Wall Street is hoping that it means a gentler Fed. The central bank has raised its key overnight rate to a range of 4.25% to 4.50% from roughly zero a year ago. The Fed will announce its next decision on interest rates Feb. 1. Investors are largely forecasting a raise of just 0.25 percentage points next month, down from December’s half-point hike and from four prior increases of 0.75 percentage points.
The broader economic picture is still not clear enough to see whether the Fed's fight against inflation is working well enough to avoid a recession. Several major banks have forecast at least a mild recession at some point in 2023.
Investors are also reviewing the latest batch of corporate earnings to get more insight into how inflation and consumer spending are affecting profits and revenue. PNC Financial Services Group fell 5.3% after reporting weak earnings.
Markets in Europe and Asia were mostly higher. Japan's Nikkei 225 rose 2.5% after the Bank of Japan kept its loose monetary policy unchanged, dispelling speculation that it would yield to pressure and join other central banks in raising interest rates to fight inflation.
Elaine Kurtenbach and Matt Ott contributed to this report.