Wall Street Drifts as Momentum Eases Following Strong Run

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U.S. stock indexes are trading without a clear direction in early trading, as Wall Street’s momentum slows after a robust run over the last six months. The S&P 500 edged down 0.1% early Wednesday, coming off its worst day in four weeks. The Dow Jones Industrial Average slipped 11 points, and the Nasdaq composite was off 0.3%. Intel saw a decline after disclosing details about several key parts of its business for the first time, while Cal-Maine Foods rose after reporting stronger profit for the latest quarter than expected, driven by record egg sales. Treasury yields increased in the bond market.

Wall Street was mixed in premarket trading Wednesday, following a day of market anxiety over potential interest rate cuts that led to the worst day in weeks.

Dow futures rose slightly before the bell, while S&P 500 futures fell marginally.

Traders have significantly lowered their expectations for Federal Reserve interest rate cuts this year, halving them from an initial forecast of six at the start of the year. This aligns with the three cuts hinted at by Fed officials themselves.

The U.S. economy, particularly the labor market, has remained stronger than expected, raising the possibility that the Fed may deliver just two rate cuts this year. The Fed had raised its benchmark borrowing rate 11 times beginning in March 2022 to combat persistent inflation during the COVID-19 pandemic.

While inflation has eased in the past two years, the U.S. economy continues to show signs of strength, leading Fed officials to be cautious about hastily cutting rates.

In Europe, inflation fell more than expected in March to 2.4%, but analysts suggest this may not be sufficient to prompt the ECB’s first interest rate cut.

The latest U.S. inflation reports, covering both wholesale and consumer levels, are due out next week.

In equities trading, egg producer Cal-Maine Foods saw a 7% jump after beating third-quarter profit targets, driven by strong demand for eggs, especially during the holidays.

Intel shares slid 4.7% after the chipmaker outlined a new financial reporting structure and provided recast operating segment financial results for the past three years. The company reported that its foundry, or manufacturing segment, lost $7 billion in 2023, a figure not previously broken out in its financial reporting.

In Europe, France’s CAC 40 and Germany’s DAX each rose 0.2%, while Britain’s FTSE 100 fell 0.3% by midday.

In Asia, Japan’s benchmark Nikkei 225 slid 0.8% in morning trading, Sydney’s S&P/ASX 200 slipped 1.3%, and South Korea’s Kospi dropped 1.4%. Hong Kong’s Hang Seng lost 1.1%, while the Shanghai Composite fell 0.2%.

Analysts are concerned that the turbulence in Wall Street might spread to Asia, despite relatively positive economic signs from China.

In energy trading, benchmark U.S. crude added 85 cents to $86 a barrel, and Brent crude rose 88 cents to $89.80 a barrel.

In currency trading, the U.S. dollar rose to 151.79 Japanese yen from 151.54 yen, while the euro cost $1.0784, up from $1.0776.

Featured Image: Freepik @ wirestock

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About the author: Stephanie Bedard-Chateauneuf has over six years of experience writing financial content for various websites. Over the years, Stephanie has covered various industries, with a primary focus on tech stocks, consumer stocks, health stocks, and personal finance. This stock lover likes to invest for the long-term. Stephanie has an MBA in finance.