US stocks rose at the open on Wednesday before giving up gains, continuing a sluggish start to the week as investors digested fresh economic data and await comments from Federal Reserve Chairman Jerome Powell.
The S&P 500 (^GSPC) was down 0.3% in early trade, while the Dow Jones Industrial Average (^DJI) was down 0.6%. The technology-heavy Nasdaq Composite (^IXIC) rose 0.2%.
Stocks closed lower on Tuesday, even as concerns about China’s strict anti-coronavirus policy faded. US-listed Chinese stocks rose for a third day, adding to a record high this month as Beijing announced plans to speed up vaccination of the elderly in China on Tuesday, sparking optimism among investors about the path forward for easing COVID restrictions amid nationwide protests.
The US dollar was weaker early on Wednesday, while the yield on the benchmark 10-year Treasury fell to 3.733% from 3.755% on Tuesday. In the oil markets, the global benchmark Brent crude (BZ=F) rose 2.3% to $82.90 a barrel. WTI (CL=F) rose 2.6% on Wednesday to $80.25 a barrel.
For investors, though, all eyes will be on Federal Reserve Chair Jerome Powell’s speech Wednesday afternoon at the Brookings Institution, the final speech before the Fed’s next rate-setting meeting in mid-December. But “investors vacillate between preparing for a Jackson Hole repeat and seeing Powell repeat views from other recent Fedspeak,” writes Andrew Tyler, head of US Market Intelligence at JP Morgan.
As the Fed strives to fulfill its dual mandates of price stability and maximum sustainable employment, Powell is widely expected to signal that the Fed is on track to ease slightly on the pace of monetary policy tightening, and is likely to step down to 50 – Increased base points.
This letter also comes less than two weeks before the release of consumer price data for November.
“All eyes will continue to be focused on inflation at this point,” Providence Financial Services and Insurance President Anthony Saccaro told Yahoo Finance Live on Tuesday.
Ahead of Powell’s scheduled speech on Wednesday, US Secretary of State Janet Yellen focused on the Fed’s competence as an organization saying they are “qualified people trying to make their best judgment.”
Early in the day, investors considered another wave of macroeconomic data. The ADP employment report showed that private companies added 127,000 jobs for the month of November, short of expectations of around 200,000, in further indications of a flagging job market.
“Tipping points in the labor market can be difficult to pinpoint, but our data suggests that Fed tightening is having an impact on job creation and wage gains,” said Nella Richardson, chief economist at ADP, in a statement. In addition, companies are no longer in oversubstitution mode. Fewer people give up smoking and post-pandemic recovery stabilizes.”
Also in terms of data:
US gross domestic product for the third quarter of 2022 increased at an annual rate of 2.9%, according to government estimates. The report also found that the personal consumption expenditures index, which measures prices of consumer goods and services, rose 4.3% in the quarter, an upward revision of 0.1 percentage point. Excluding food and energy prices, the personal consumption expenditures price index rose 4.6%, revised up 0.1 percentage point.
Employment opportunities in the United States fell to 10.33 million in October, down 10.68 from the previous month, according to the Bureau of Labor Statistics’ Job Opportunities and Employment Turnover Survey (JOLTS). Economists polled by Bloomberg predicted that jobs would drop to 10.25 million in the month.
Data from the National Association of Realtors showed on Wednesday that contracts signed for existing homes in the United States fell 4.6% in October, the fifth straight drop as demand interest rates fell.
The Chicago Purchasing Managers’ Index (PMI) fell to 37.2, below expectations of 47.0, the lowest reading since June 2020.
Finally, the Fed’s Beige Book, a survey of the Fed’s regional banks, will be released on Wednesday afternoon.
On the earnings front, Salesforce (CRM), Five Below (FIVE), and Okta, Inc. (OKTA), Snowflake (SNOW), and Victoria’s Secret (VSCO) to report earnings on Wednesday.
Shares of CrowdStrike Holdings, Inc. sank. (CRWD) increased by more than 18% after the cybersecurity company’s expected quarterly revenue fell short of analyst expectations as customers cut spending and delayed buying due to macroeconomic headwinds. DoorDash (DASH) is laying off about 1,250 people in an effort to cut expenses, according to a report by Bloomberg, citing a memo from its CEO Tony Xu.
Danny Romero, Yahoo Finance correspondent. Follow her on Twitter @employee
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