4:10pm: Recession concerns and weak home sales drag markets
Stocks lost momentum on Wednesday after hitting record highs.
The Dow Jones and S&P 500 both closed lower with the former down 0.7% at 41,915 points and the latter 0.2% at 5,711. The Nasdaq closed level at 18,082.
Investors are debating the likelihood of a recession, fueled by a weak consumer confidence report and uncertainty over the Federal Reserve's future rate cuts. August's new home sales dropped, but mortgage applications surged, driven by refinancing activity.
Markets are now focused on upcoming economic data, including the second-quarter GDP and the Fed’s preferred inflation measure, the PCE index.
2:10pm: SAP under investigation
SAP shares were down 3.1% Wednesday afternoon following reports the German tech firm is being investigated for alleged price fixing for technology sold to the US government over the last decade.
US regulators are investigating if SAP worked with its product reseller Carahsoft to fix prices.
Per a Bloomberg report, overcharging could have impacted $2 billion in products and services sold to US government departments since 2014.
The Department of Justice (DOJ) has been investigating SAP and Carahsoft since at least 2022, the publication said.
12:30pm: Markets mixed following Fed's dovish signals
The Dow and S&P 500 turned negative following modest gains yesterday amid optimism from last week's Federal Reserve rate cut and dovish comments from Fed officials.
Just after noon, the Dow dropped around 0.6%, while the S&P 500 was down around 0.1% following record closes for both indexes. In contrast, the tech-heavy Nasdaq was the sole major index in positive territory, rising by about 0.1%.
Key economic data releases, including GDP growth figures and comments from Fed Chair Jerome Powell, are expected later this week.
"Investors are awaiting GDP growth data tomorrow in addition to the comments of Fed Chair Jerome Powell and other members for further insights into the central bank's monetary policy outlook," noted Bas Kooijman, CEO and Asset Manager of DHF Capital.
"Friday's Personal Consumption Expenditures (PCE) data could also affect sentiment."
Meanwhilewhile mega-cap stocks showed mixed results, particularly with Alphabet and Microsoft in the spotlight due to an antitrust complaint.
11:05am: Gold buoyed by further rate cuts
Gold is once again hovering around record highs as the market anticipates more Fed rate cuts.
A potential 75 basis point rate cut by the Federal Reserve, coupled with steady central bank demand, points to a positive short-to-medium-term outlook for gold prices, according to Joseph Dahrieh, Managing Principal at Tickmill.
"Yesterday’s data revealed a larger-than-expected drop in US consumer confidence, reinforcing dovish comments from Federal Reserve officials," Dahrieh wrote.
"Consequently, the market now anticipates another 75 basis point rate cut by year-end. The expectations could support gold prices while weighing on the dollar.
"Market participants are now focusing on upcoming economic data, including the Personal Consumption Expenditures (PCE) report, the Fed’s preferred inflation measure, for further guidance."
9.40am: Dow Jones, S&P 500 climb as Wall Street opens
The Dow Jones and S&P 500 built on their record closing values seen on Tuesday as Wednesday’s trading got underway in New York.
Both opened just above the mark, with the Nasdaq following suit to also rack up a slight gain early on.
Wall Street had followed global markets higher on Tuesday following a string of measures announced by China earlier in the day aimed at boosting the world’s second-largest economy.
Positive US economic data appeared to boost sentiment further on Wednesday as mortgage approvals were said to have continued rebounding last week.
According to the Mortgage Bankers Association, mortgage applications climbed by 11% over the week to September 20, after a 14.2% jump previously, with the improvement coinciding with the Federal Reserve’s move to cut interest by 0.5%.
7.31am: Dow Jones set to build on latest record in mixed start on Wall Street
The Dow Jones appeared set to build on Tuesday’s latest closing record ahead of trading on Wednesday.
Having carried on a record-breaking run to end Tuesday at 42,208, futures had the Dow Jones ticking up a further 24 points ahead of Wednesday’s opening bell.
Nasdaq and S&P 500 futures had both indices off the mark prior the the bell though, with the latter also having struck a closing high of 5,733 on Tuesday.
Optimism on the back of China’s plans to reinvigorate its struggling economy earlier in the day had driven gains through Tuesday, with these including measures to lower borrowing costs and reduce restrictions on lending.
“While markets have clearly enjoyed a welcome boost off the back of a surprisingly comprehensive set of measures,” Scope Markets analyst Joshua Mahony said, “we are ultimately left wondering whether it will resolve the stuttering growth story or simply provide a short-term boost to sentiment”.
He added Tuesday’s consumer confidence survey, which had shown a slump for September, raised further questions over America’s own economy.
“This feeds back into the narrative around a potential slowdown in the jobs market,” Mahony continued, with “the prospect of a hard landing” threatening “fresh concerns over the direction of earnings” for markets.