NEW YORK (AP) — Wall Street is drifting and making smaller moves on Wednesday, a day after strong reports on the economy stirred up worries that inflation and interest rates may stay higher than expected.
The S&P 500 was edging down by 0.1% in early trading after its 1.1% slump the day before. The Dow Jones Industrial Average was down 115 points, or 0.3%, as of 9:35 a.m. Eastern time, and the Nasdaq composite was up by less than 0.1%.
In the bond market, which has been the bigger focus for Wall Street recently, yields were also making more modest moves after charging higher over the last month. Higher yields hurt prices for stocks by making it more expensive for companies and households to borrow and by pulling some investors toward bonds and away from stocks.
Reports on the economy Wednesday weren’t as strong as Tuesday’s, which raised hopes that the Federal Reserve may keep cutting short-term interest rates to support the economy and give markets a boost. Fed Governor Christopher Waller said in a speech Wednesday he still expects the central bank to deliver more easing of rates in 2025, pushing back against speculation it may already be done after cutting three times since September.
Waller said he doesn’t expect tariffs that are possibly coming under President-elect Donald Trump to have a “significant or persistent effect” on inflation. And even though inflation has shown stubbornness recently, he still sees it trending downward over the long term.
“If the outlook evolves as I have described here, I will support continuing to cut our policy rate in 2025,” he said in Paris. “The pace of those cuts will depend on how much progress we make on inflation, while keeping the labor market from weakening.”
The yield on the two-year Treasury, which tends to closely track expectations for Fed action, fell immediately after Waller’s speech and the release of a couple economic reports. It edged down to 4.28%, down from 4.29% late Tuesday.
One of the reports suggested U.S. employers outside of the government slowed their hiring in December by more than economists expected. That could offer a hint of what Friday’s more comprehensive jobs report from the Labor Department will show. That update will likely be the main event for Wall Street this week, particularly after the stock market’s closure on Thursday in observance of a National Day of Mourning for former President Jimmy Carter.
A separate report on Wednesday said fewer U.S. workers applied for unemployment benefits last week than economists expected. It’s the latest signal that the job market remains remarkably solid.
The yield on the 10-year Treasury, which is the centerpiece of the bond market, rose to 4.71% from 4.69%, where it was late Tuesday.
In the stock market, Cal-Maine Foods climbed 6.4% after the egg producer reported stronger profit for the latest quarter than analysts expected. CEO Sherman Miller said it sold more dozens of eggs thanks in part to strong demand from the seasonal boost it gets leading into Thanksgiving.
Egg prices climbed late last year as a lingering outbreak of bird flu coincided with the high demand of the holiday baking season.
Delta Air Lines will report its first-quarter results on Friday, with big banks beginning next week to kick off the latest earnings reporting season in earnest.
In stock markets abroad, indexes weakened across much of Europe after finishing mixed in Asia. South Korea’s Kospi climbed 1.2%, but Hong Kong’s Hang Seng fell 0.9%.
___
AP Writers Matt Ott and Zimo Zhong contributed.
