NEW YORK: The main US stock indexes ticked lower on Wednesday, a day after breaking a three-day record closing streak, as traders assessed measured comments from Federal Reserve Chair Jerome Powell and awaited key economic data due later in the week.
Investors are treading cautiously as the central bank attempts to strike a delicate balance between managing inflation risks and responding to signs of a weakening labor market.
Powell said on Tuesday asset prices appeared fairly highly valued. As his colleagues staked out arguments on both sides of the policy divide, the Fed chair emphasized the tightrope the central bank must walk in upcoming policy decisions.
“Markets started discounting the tariff risks and then recovered because there were exemptions,” said Jitania Kandhari, deputy CIO of portfolio solutions at Morgan Stanley Investment Management.
Last week’s Fed rate cut helped lift equities in September, typically a weak month for stocks, with investors now banking on further easing to keep the rally alive.
But whether more cuts are warranted will depend heavily on data, Kandhari said.
At 12 p.m. ET, the Dow Jones Industrial Average fell 155.77 points, or 0.34 percent, to 46,137.30, the S&P 500 lost 28.83 points, or 0.43 percent, to 6,628.09, and the Nasdaq Composite shed 127.36 points, or 0.56 percent, to 22,446.11.
The S&P 500 energy index ground up 2 percent, tracking higher crude prices. Consumer discretionary stocks edged up 0.5 percent.
These were countered by a 0.7 percent decline in heavyweight tech shares, with Apple and Nvidia falling more than 1 percent each.
Data released on Wednesday showed the sales of freshly constructed single-family US homes unexpectedly surged by 20.5 percent in August.
“If the housing market is starting to regain some life, the Fed might take that as an indication that there is less room to lower rates,” William Blair analyst Richard de Chazal said in a note.
US-listed shares of Chinese companies rose, led by an 8.9 percent rise in Alibaba Group, which unveiled a partnership with Nvidia. Lithium Americas’ US-listed shares nearly doubled after Reuters reported on Tuesday that President Donald Trump’s administration was seeking an up to 10 percent equity stake in the company.
Talks are underway to discuss a government loan exceeding USD2.26 billion for the company’s Thacker Pass lithium project with General Motors, which rose 1.4 percent. UBS also upgraded General Motors to “buy” from “neutral”.
Micron Technology fell 4 percent after the memory chipmaker reported quarterly results.
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