The U.S. stock market faced a volatile trading day on Wednesday, with significant movements in key indices as investors braced for upcoming economic indicators.
The S&P 500 managed to rise 0.4%, breaking a four-day losing streak, which marked its longest decline in nearly three months. This shift came as traders navigated concerns about elevated stock prices and the potential for the Federal Reserve to be less aggressive in cutting interest rates than previously anticipated. The index fluctuated throughout the day, initially dipping before rebounding by as much as 1.1%.
Meanwhile, the Dow Jones Industrial Average increased by 47 points, or 0.1%, while the Nasdaq composite experienced a 0.6% gain. A highlight for the day was Constellation Energy, which surged 5.3% after the U.S. Department of Energy announced a $1 billion loan to help restart the nuclear power plant at Three Mile Island. In contrast, Lowe’s reported stronger-than-expected summer profits, contributing to a 4% rise in its stock.
However, Target’s stock faced a setback, dropping 2.8% due to weaker-than-expected revenue figures for the latest quarter and warnings of ongoing challenges through the vital holiday shopping season.
The market’s attention also remained firmly on Nvidia, the tech giant whose stock rose 2.8% ahead of its much-anticipated quarterly profit report. Nvidia has solidified its position as the largest stock on Wall Street, briefly surpassing a market cap of $5 trillion. Its performance significantly influences the S&P 500, showcasing its importance within the broader market landscape.
As traders awaited Nvidia’s results, analysts noted a growing sentiment that the company’s ability to deliver strong profits would be critical in addressing concerns about its inflated stock price, which has seen a decline of approximately 10% since late last month. Following the market close, Nvidia reported better-than-expected profits and forecasted around $65 billion in revenue for the upcoming quarter, prompting optimism around its role in the artificial intelligence sector. CEO Jensen Huang stated that the company had entered a “virtuous cycle of AI,” reflecting the increasing reliance on its technology in the AI resurgence.
Nonetheless, skepticism persists regarding the sustainability of investments in AI, with critics drawing parallels to the dot-com bubble of the late 1990s, which ultimately resulted in a significant market downturn.
Traders are also gearing up for a critical jobs report from the U.S. government, detailing employment changes in September. This report, which experienced delays due to the federal government’s shutdown, is seen as especially relevant amid a slowing job market. The Fed’s recent interest rate cuts aimed at supporting economic growth and asset prices could be influenced by this data, particularly as officials weigh their approach to future monetary policy amidst stubborn inflation that remains above their target.
Speculation around the Fed’s next move has contributed to fluctuations in the bond market, with the yield on the 10-year Treasury holding steady at 4.12%. Insights from the Fed’s latest meeting minutes indicated a preference among some officials to maintain current rates through 2025, reinforcing a cautious approach as uncertainty looms over future economic conditions.
In summary, amid mixed performances across international markets and a backdrop of uncertainty regarding economic indicators, the S&P 500 closed at 6,642.1, up 24.84 points. The Dow Jones capped the day at 46,138.77, while the Nasdaq finished at 22,564.23, up 131.38 points.
