Business

S&P 500 falls after 17th record high this year Dow posts third straight gain

Analyst says, 'Inflation may have ticked up in the U.S., but the glass-half-full mentality rules for now.'

Stocks in the U.S. ended with a mixed performance on Wednesday. Investors analysed the previous session's gains, which pushed the S&P 500 to its 17th record high of the year.

Stock indexes performance

• According to preliminary data, the Dow Jones Industrial Average saw a modest increase of 37.83 points on the latest trading day, closing at 39,043.32. The market surged nearly 200 points to reach a session high of 39,201.94 earlier today.

• The S&P 500 index closed lower by 9.96 points, representing a 0.2% decrease, finishing at 5,165.31.

• The Nasdaq Composite closed lower by 87.87 points, or 0.5%, ending at 16,177.77.

As Dow Jones Market Data reported on Tuesday, three stock indexes experienced their most significant one-day point and percentage gains since Feb. 22. The S&P 500 closed at 5,175.27, marking a 1.1% increase. The Dow industrials saw a 0.6% rise, and the NASDAQ climbed by 1.5%.

What factors influenced market movements.

On Wednesday, the S&P 500 did not reach a new record high as investors digested a higher-than-expected consumer-price index report for February. Investors are still anticipating a possible interest-rate cut of at least 25 basis points from the Federal Reserve in June.

According to Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott, he expressed confidence in the direction of inflation moving back towards the Fed's 2% target. However, he remains to determine the timing.

"The recent inflation data over the last two months has not significantly altered the views of Federal Open Market Committee officials on monetary policy," LeBas shared with Market Watch during a phone interview on Wednesday.

Last week, Federal Reserve Chair Jerome Powell testified about the possibility of rate cuts continuing into 2024. Comments from other Fed officials in the past month indicate a strong consensus among policymakers regarding the timing of interest rate reductions, according to LeBas.

The most recent Summary of Economic Projections, unveiled in December, revealed that FOMC members estimated three cuts totalling 75 basis points by the end of 2024. Mark your calendars for releasing the Fed's latest interest-rate projections next Wednesday.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, pointed out that despite a slight increase in inflation in the U.S., the prevailing sentiment remains optimistic due to the strong foundation of the U.S. economy, leading to a sense of celebration rather than apprehension.

No significant economic reports were released in the U.S. on Wednesday. Federal Reserve officials made no public statements during silence before the upcoming policy decision.

After a day of boosting market sentiment, technology stocks took a step back, especially megacap tech stocks driven by secular growth factors. The artificial intelligence chip maker Nvidia saw its shares rise over 7% on Tuesday before closing 1.1% lower on Wednesday due to profit-taking.

Several companies, including Dollar Tree Inc., Petco Health & Wellness Co. Inc., and Williams-Sonoma Inc., released their earnings reports before the opening bell on Wall Street. Meanwhile, UiPath Inc., SentinelOne Inc., and Lennar Corp. are scheduled to report their results after the market closes.

Focus on companies

• Dollar Tree Inc.'s shares dropped 14.2% on Wednesday following a disappointing fiscal fourth-quarter performance. The discount retailer fell short of profit expectations, offered a pessimistic outlook, and announced intentions to shut down several Family Dollar stores.

• Petco Health & Wellness Co. Inc.'s stock closed lower by over 1% following the company's announcement of another quarterly loss despite reporting stronger-than-anticipated sales for its fiscal fourth quarter.

• Tesla Inc. saw its shares drop by 4.5% after being downgraded by Wells Fargo, reducing the price target significantly.