In early trading on Wednesday, stocks wavered between modest gains and losses, with the performance remaining sluggish into the afternoon. While there was a slight decline in the Nasdaq and the S&P 500, the Dow reported a small increase.
At present, the Dow is up by 123.83 points or 0.3% at 37,939.75, the Nasdaq has dropped 54.90 points or 0.4% to 15,602.95, and the S&P 500 is down 13.90 points or 0.3% at 5,021.79.
The irregular trading on Wall Street reflects the market's apprehension as we anticipate this afternoon's monetary policy announcement from the Federal Reserve. Although it is presumed the Fed will keep the rates unchanged, market participants will closely monitor the statement's language and Federal Reserve Chair Jerome Powell's press conference.
John Lynch, Chief Investment Officer for Comerica Wealth Management, noted, "Yesterday's late selloff highlighted the market's shift from hoping for monetary easing to acknowledging the persistence of higher rates." He added, "We expect today's significant news to originate not from the FOMC, but from the Treasury's refunding announcement. Increased liquidity signs should enable economic demand and risk assets to recover."
In US economic news, payroll processor ADP reported that private sector employment in April increased more than anticipated. The employment rose by 192,000 jobs in April, following an adjustment of 208,000 additions in March. Economists predicted a job rise of 175,000 compared to the original 184,000 for the previous month.
ADP's chief economist Nela Richardson remarked, "April saw widespread hiring. Only the information sector - telecommunications, media, and information technology – fell behind, registering job losses and the smallest rate of pay increase since August 2021."
In a separate report, the Institute for Supply Management signaled a slight contraction in US manufacturing activity in April. The manufacturing PMI declined to 49.2 in April from 50.3 in March, with any score below 50 pointing to contraction. This small setback occurred after sixteen consecutive months of contraction, followed by a modest expansion in March.
On the sector front, semiconductor stocks sustained significant losses, led by Advanced Micro Devices (AMD), which fell by 9.2% despite better-than-expected Q1 results. Computer hardware stocks also saw considerable declines, with Super Micro Computer's shares dropping by 15.2% due to lower-than-expected Q3 revenue. Energy and airline stocks experienced losses, while utility stocks made substantial gains.
In international markets, both Japanese and Australian stocks fell on Wednesday, with Labor Day closing most markets in the Asia-Pacific region. Japan's Nikkei 225 Index slipped by 0.3%, and Australia's S&P/ASX 200 Index fell by 1.2%. In Europe, though most significant markets were closed, UK stocks reported modest losses, with the FTSE 100 Index closing down 0.3%.
In the bond market, treasuries recouped some lost ground from the previous session, resulting in a decrease of 2.9 basis points to 4.657% in the yield on the standard ten-year note.