Chuck Mikolajczak
NEW YORK (Reuters) – U.S. stocks fell in choppy trading on Wednesday as investors weighed the Federal Reserve’s stance on interest rates and its dovish earnings package at the start of earnings season.
Travelers (NYSE:) shares fell 7.45%, one of the biggest declines for the Dow Industrials, after the insurance giant missed Wall Street’s first-quarter earnings expectations.
The benchmark S&P index was also impacted following quarterly results Prologis (NYSE:), with the warehouse real estate investment trust falling 6.25%, and Abbott Laboratories (NYSE:), which fell 2.98% after beating quarterly estimates but disappointing full-year guidance.
Stocks are struggling after a strong rally in the first quarter, with the S&P 500 on track for a fourth straight session of declines and a third straight weekly loss as investors lowered expectations for the timing and size of a Fed rate cut.
On Tuesday, U.S. central bank officials, including Federal Reserve Chairman Jerome Powell, abandoned guidance on when rates could be cut, saying instead that monetary policy should be tighter for longer.
“Markets are facing several things: inflation is higher than many expect, expectations for rate cuts are easing, and we have rising geopolitical tensions, especially in the Middle East,” said Anthony Salmbene, chief market strategist. at Ameriprise Financial (NYSE:) in Troy, Michigan.
“This is just an opportunity for traders to step back and for markets to take a little breather after a really, really strong five months of gains.”
The index rose 11.92 points, or 0.03%, to 37,810.89. The S&P 500 lost 16.98 points, or 0.34%, to 5,034.47 and fell 118.51 points, or 0.74%, to 15,747.35.
Fed Chair Michelle Bowman and Cleveland Fed President Loretta Mester are scheduled to speak later in the day.
The Fed’s Beige Book survey of economic activity showed modest growth from late February to early April, and companies feared progress in reducing inflation would stall.
After market participants began to largely price in the Fed’s June rate cut, expectations for a rate cut of at least 25 basis points fell to 16.8% and a July cut to 46%, the FedWatch Tool CME showed.
Stocks pared losses as U.S. Treasury yields retreated further from the previous day’s multi-month highs following a strong auction in the 20-year note, with the 10-year yield near 4.58%.
On the other hand, United Airlines shares rose 16.05% after forecasting stronger-than-expected results for the current quarter, helping lift the NYSE Arca Airline Index by 3.45%.
JB Hunt (NASDAQ:) Transport Services shares fell 8.63% after the trucking company missed Wall Street estimates for its first quarter results.
US Bancorp shares fell 3.43% after the lender cut its full-year interest earnings forecast and reported a 22% drop in first-quarter profit.
Advancing issues outnumbered declining ones on the NYSE by a ratio of 1.3 to 1. Decliners outnumbered advancing ones on the Nasdaq by about 1.11 to 1.
The NYSE recorded 18 new 52-week highs and 87 new lows, while the Nasdaq recorded 25 new highs and 196 new lows.