New York, Feb. 28 (Reuters) Before a significant inflation statistic that could impact the timing of a Federal Reserve interest rate cut, U.S. stocks fell modestly on Wednesday.
The Fed's favored inflation gauge, the personal consumption expenditures (PCE) price index, is forecast to rise 0.3% in January. Before the data, stocks had struggled to maintain upward momentum after a lengthy run crested last week on anticipation for artificial intelligence (AI), spurred by Nvidia's (NVDA.O), opens new tab quarterly earnings.
The market has lowered expectations for the Fed's first rate decrease to June from March due to tenacious inflation in consumer and producer prices, a solid U.S. economy, and Fed policymakers' comments.
“Now that earnings catalysts are behind us, the market may soften as it adjusts to inflation and the Federal Reserve's response, whether rhetoric or a higher-for-longer policy," said Keith Buchanan, senior portfolio manager at GLOBALT Investments in Atlanta.
"Any embers or symptoms of resurgence in pockets, or in aggregate, of inflation will definitely be taken pretty harshly by the markets." The Dow Jones Industrial Average (.DJI) fell 23.39 points, or 0.06%, to 38,949.02, the S&P 500 (.SPX) fell 8.42 points, or 0.17%, to 5,069.76, and the Nasdaq Composite (iXIC) down 87.56 points, or 0.55%, to 15,947.74.
Consumer spending boosted the U.S. economy in the fourth quarter, but it slowed early in 2024, according to Wednesday data. Weekly initial jobless claims, manufacturing activity, and PCE indicators will test the economy's strength and interest rate path this week.
On Wednesday, Boston Fed Bank President Susan Collins said the Fed should "taking time" to analyze facts before changing policy to maximize employment and price stability. President John Williams of the New York Federal Reserve said that while the Fed's 2% inflation target is far off, evidence may suggest rate decreases this year.
UNH.N, opens new tab fell 2.95% as the Dow's biggest drag and one of the S&P 500's largest after the DOJ launched an antitrust inquiry on Tuesday. After a February SEC subpoena, Applied Materials (AMAT.O) declined 2.62%. Beyond Meat (BYND.O), opens new tab surged 30.72% as the plant-based meat producer sought to improve its margins with price rises and cost cutbacks, crimping its widely shorted shares.
On the NYSE and Nasdaq, falling issues outnumbered advancers 1.21 and 1.72-to-1, respectively. Marathon Digital (MARA.O) and Coinbase Global (COIN.O) ended higher but below their highs. Bitcoin neared $64,000 before consolidating. The S&P 500 achieved 67 52-week highs and one low. Nasdaq highs and lows were 173 and 95.
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