The S&P 500 and Nasdaq closed higher on Wednesday after data showing the U.S. services industry growth slowed further in March, but the advance was limited after Federal Reserve Chair Jerome Powell indicated a cut in interest was still not in sight.
Most of the major S&P 500 sectors advanced, led by gains
in energy, materials and communication services.
Powell reaffirmed in a speech on Wednesday that the Fed will
stick to its wait-and-see approach as it considers when to start cutting rates
given the continued strength of the U.S. economy and recent
higher-than-expected inflation data.
Earlier on Wednesday, data from the Institute for Supply
Management showed that non-manufacturing PMI declined for the second straight
month to 51.4 in March, down from 52.6 in February, and weaker than analysts
had expected, according to a Reuters poll.
A reading above 50 indicates growth in the services
industry, which accounts for more than two-thirds of the economy, and the data
still indicates the U.S. economy continues to expand, though at a moderate
pace.
"It all has to do with the Fed and market expectations
for a rate cut being pushed off. I think that's really what is weighing on the
market here and has been for at least a couple of days," said Tim
Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York.
The Dow Jones Industrial Average fell 43.1 points, or 0.11%,
to 39,127.14, the S&P 500 gained 5.68 points, or 0.11%, to 5,211.49 and the
Nasdaq Composite added 37.01 points, or 0.23%, to 16,277.46.
The U.S. central bank had been expected to start cutting
rates as early as June, but with recent robust economic data, many in the
market have been questioning the timetable.
In separate comments to CNBC on Wednesday, Atlanta Fed
President Raphael Bostic said rates should likely not be reduced until the
fourth quarter of this year.
"There's this kind of yin and yang data scenario where
you have some strong data that has some good-news-is-bad-news feel to it,"
said James St. Aubin, chief investment officer at Sierra Investment Management
in California.
Among decliners, Ulta Beauty dropped 15.3% after the beauty
retailer gave downbeat forecast at an industry conference. Shares of e.l.f.
Beauty and Coty also fell.
Also, Intel shares dropped 8.2% after the chipmaker
disclosed $7 billion in operating losses for its foundry business in 2023,
steeper than the $5.2 billion reported the year before.
Volume on U.S. exchanges was 11.03 billion shares, compared
with the 11.76 billion average for the full session over the last 20 trading
days.
Advancing issues outnumbered declining ones on the NYSE by a
1.66-to-1 ratio; on Nasdaq, a 1.25-to-1 ratio favored advancers.
The S&P 500 posted 33 new 52-week highs and 5 new lows;
the Nasdaq Composite recorded 90 new highs and 124 new lows.
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