Stocks closed modestly higher on Wall Street, chipping away at their losses for August
NEW YORK — Stocks ended modestly higher Wednesday, extending Wall Street’s recent winning streak to its fourth day in a row and chipping away more of the market’s losses this month.
After a choppy day of trading, the S&P 500 closed 0.4% higher. The benchmark index remains down 1.6% for August, with one trading day left in the month. The Dow Jones Industrial Average edged up 0.1%, while the Nasdaq composite added 0.5%.
Technology stocks led the market’s gains. Apple rose 1.9% and Palo Alto Networks rose 1.7%. HP was on the losing end with a 6.6% slump after cutting its profit forecast for the year.
Wall Street’s focus this week remains a broad mix of data that investors hope will paint a clearer picture of where the economy is headed and whether the Federal Reserve has enough reason to hold off on further interest rate hikes.
A survey of private-sector employers in the U.S. showed that hiring cooled more than expected by economists. The report reinforces the latest government data on job openings from Tuesday, which also showed that hiring is cooling somewhat.
The U.S. downgraded its economic growth estimate for the second quarter to an annual rate of 2.1% from 2.4%. Economists had forecast that the gross domestic product, or GDP, assessment would remain unchanged though it still marks a slight increase from growth of 2% during the first quarter.
Treasury yields fell following the latest economic reports. The yield on the 10-year Treasury slipped to 4.11% from about 4.15% just before the latest GDP report. It stood at 4.12% late Tuesday.
The yield on the 2-year Treasury, which tracks expectations for the Fed, fell to 4.88% from 4.90% prior to the latest GDP release. It stood at 4.89% late Tuesday.
“Right now, what’s bad is good,” said Scott Wren, senior global market strategist at Wells Fargo Investment Institute. “It feels like this week, anyway, we’re fully back into bad economic news is good for the market.”
The latest round of economic updates are signaling that the Fed may be able to pause hiking its main interest rate, which it has pushed to its highest level since 2001 in an effort to tame inflation. The central bank held rates steady at its last meeting and investors expect the same at its upcoming meeting in September.
Wall Street is also hoping that economic data this week shows that the Fed’s goal of a “soft landing” is possible. The central bank’s goal has been to raise interest rates enough to tame inflation without crashing the economy into a recession. A strong job market and consumer spending has helped thwart a recession and analysts are divided on whether one will occur with any severity.
On Thursday, the government will release its latest update on inflation with the July report on personal consumption and expenditures, or PCE. That’s the Fed’s preferred measure for inflation, and it has been cooling for months. PCE eased to 3% in June and was as a high as 7% a year ago.
On Friday, the government’s monthly employment report for August will cap a heavy week of updates about hiring and jobs.
“If you have modest growth and modest inflation and that’s what we’re moving toward, stocks will have a bumpy road in the interim, but that’s a good environment for stocks,” Wren said.
Market jitters over the possibility that interest rates end up staying higher for longer led to a pullback for stocks this month following what had been a banner year. Even so, the S&P 500, which soared 19.5% through July, remains about 17.6% higher for the year, while the tech-heavy Nasdaq is up nearly 34%.
On Wednesday, the S&P 500 rose 17.24 points to 4,514.87, the Dow added 37.57 points, or 0.1%, to 34,890.24, and the Nasdaq gained 75.55 points to 14,019.31.
Markets in Asia ended mixed and European markets mostly fell.