On Wednesday, the S&P 500 closed nearly unchanged, with technology stocks advancing, yet investors showed concerns regarding tensions in the Middle East and upcoming U.S. labor data this week.
Shares of Nvidia increased by 1.6%, contributing positively to the S&P 500 technology index. Conversely, Tesla’s stock dropped by 3.5% after the electric vehicle manufacturer reported third-quarter vehicle deliveries falling short of predictions.
Investors were attentive to Middle Eastern developments after Israel and the U.S. pledged to retaliate following Iran’s assault on Israel on Tuesday. U.S. President Joe Biden stated on Wednesday that he would not back an Israeli strike on Iran’s nuclear facilities in reaction to its missile strike and urged Israel to respond “proportionally.”
Early Wednesday data indicated a larger-than-expected increase in U.S. private payrolls for September, providing further proof that the labor market is holding stable. Investors kept their eyes on the non-farm payrolls data due on Friday, while jobless claims data is expected on Thursday.
“With the jobs report on Friday, earnings season will kick off at the end of next week,” mentioned Michael O’Rourke, chief market strategist at JonesTrading in Stamford, Connecticut.
“We’re close to all-time highs, and the Fed is supportive. Before pushing stocks to set new records, investors hope for positive guidance from companies. There’s a general favor towards the Fed’s dovish stance, and they’re waiting for another trigger to drive prices up.”
The Dow Jones Industrial Average increased by 39.55 points, or 0.09%, ending at 42,196.52. The S&P 500 rose by 0.79 points, or 0.01%, closing at 5,709.54, while the Nasdaq Composite gained 14.76 points, or 0.08%, to finish at 17,925.12.
The market concluded September with significant gains after the Federal Reserve initiated its monetary easing cycle through an uncommon 50-basis-point rate cut aimed at stabilizing the labor market. So far, the S&P 500 has increased by 19.7% this year.
The likelihood of a quarter-percentage-point rate cut at the Fed’s November meeting stands at 65.7%, up from 42.6% a week prior, according to the CME Group’s FedWatch Tool.
On October 11, JPMorgan Chase and other major banks will commence the S&P 500 third-quarter earnings season.
A strike involving 45,000 dockworkers that halted shipments at U.S. East Coast and Gulf Coast ports entered its second day on Wednesday without any negotiations in sight, sources informed Reuters.
JPMorgan analysts estimated that the dockworkers’ strike is costing the economy approximately $5 billion daily.
Among the stocks that fell, Nike dropped 6.8% after the company retracted its annual revenue forecast just as a new chief executive prepares to take over.
Humana Inc’s shares fell by 11.8% after the health insurer projected a decline in enrollment for its top-rated Medicare Advantage plans for individuals aged 65 and older in 2025.
Declining stocks surpassed advancing ones on the NYSE with a 1.18-to-1 ratio, while on Nasdaq, a 1.09-to-1 ratio favored decliners.
The S&P 500 recorded 27 new 52-week highs and two new lows; the Nasdaq Composite noted 80 new highs against 133 new lows.
U.S. exchange volume amounted to 11.81 billion shares, compared to the 12.05 billion average for the complete session over the past 20 trading days.
Despite anticipated Federal Reserve interest rate cuts, the U.S. dollar is expected to remain stable in the months ahead, according to median forecasts from FX strategists surveyed by Reuters, who were mostly divided on the overall direction of the currency.
Since July, the dollar has nearly reversed almost all of its near 5% gains against a basket of major currencies acquired earlier this year due to expectations of a Fed rate reduction from what many viewed as an excessively tight level. Nevertheless, the currency has maintained relative stability in recent weeks.
With inflation pressures believed to be under control, the central bank commenced easing last month with an aggressive half-percentage-point cut to prevent further weakening of the job market in the world’s largest economy.
A majority of over 100 economists surveyed in a separate snap Reuters poll taken after the September meeting anticipated the Fed would reduce its key policy rate by 25 bps in both November and December.
While this aligns with the Fed’s projections and Chair Jerome Powell mentioned that policymakers are not “in a hurry” to lower rates, the expectation is less steep than the nearly 72 bps of easing that interest rate futures currently reflect.
Despite this, the dollar is projected to remain strong in the coming months, with the euro, currently around $1.11, expected to maintain that level through year-end and into the end of March, according to median forecasts from nearly 80 strategists in a poll conducted from Sept. 30 to Oct. 2.
In one year, the common currency is forecasted to strengthen about 2% to $1.13, as indicated by the survey, which aligns with expectations for dollar weakness that analysts have expressed for much of this year.
“While we believe that a global soft landing combined with Fed easing should ultimately result in broad dollar weakness, the path to that conclusion could be challenging in the near term,” stated Meera Chandan, FX strategist at JP Morgan.
