4:17pm: Stocks closed mixed
The Dow staged a recovery on Wednesday afternoon as investors digested the latest Federal Reserve meeting minutes and economic data.
At 4pm, the Dow had risen 107 points, or 0.3%, to close at 42,635. The S&P 500 gained 9 points, or 0.2%, finishing at 5,918, while the Nasdaq Composite slipped 14 points, or 0.1%, to end at 19,476.
Meanwhile, the yield on the 10-year Treasury note reached 4.71%, its highest level since April, reflecting ongoing concerns about inflation and interest rates.
3:01pm: Fed minutes summarized by "uncertainty"
The December Federal Reserve meeting minutes highlighted significant "uncertainty," according to Jeffrey Roach, Chief Economist for LPL Financial, with the term appearing 12 times, reflecting difficulties in forecasting interest rates, growth, and inflation amid evolving Trump administration policies.
Officials noted the U.S. outpacing underperforming foreign markets, with expectations of further growth divergence. Surprisingly, strong economic activity was deemed unlikely to drive inflation upward. While the disinflationary trend may have paused, the Fed remains confident inflation will gradually move toward its 2% target.
"Markets could get choppy if there is a surprise in Friday’s payroll release," Roach commented.
"A softer job market could lift the unemployment rate, giving the Fed reason to cut rates later this quarter. Some industry data are hinting at softer hiring across the economy."
2:15pm: Fed officials signal slower pace of rate cuts post-December
Federal Reserve officials indicated a more cautious approach to monetary policy, suggesting they will slow the pace of interest rate cuts after December, according to the minutes from the latest Federal Open Market Committee (FOMC) meeting.
The decision reflects concerns over persistent inflation risks, with participants noting that while inflation is expected to gradually move toward the 2% target, potential changes in trade and immigration policies could prolong the process. These factors were attributed in part to policies introduced during the Trump administration.
"Almost all" committee members highlighted the elevated risks to inflation, underscoring the need for flexibility in policy decisions as the Fed navigates an uncertain economic landscape.
Despite the cautious tone, the minutes offered no major surprises for markets, which showed little reaction to the release. Investors had largely anticipated the Fed's shift to a more gradual approach amid ongoing economic uncertainties.
1:05pm: Markets retreat on news of potential tariffs
Markets were down at the midday point Wednesday, with the Dow Jones dropping 0.3%, the S&P 500 falling 0.4%, and the Nasdaq declining 0.6%.
Economic uncertainty drove the volatility as investors watched for potential policy shifts, including reports that President-elect Donald Trump might declare a national economic emergency to impose tariffs.
Concerns over Federal Reserve interest rate decisions also weighed on sentiment.
The 10-year Treasury yield hovered around 4.72%.
11:50am: Wall Street struggling
Wall Street is struggling as rate cut bets are pushed back, says Chris Beauchamp, Chief Market Analyst at online trading platform IG.
“Yesterday’s signs of rising inflation in the US have combined with an eleven month low in jobless claims to push back expectations of any rate cuts in 2025," Beauchamp noted.
"While the claims figure shows that the US economy’s much-vaunted economic strength is still in place, rising prices mean the Fed’s job is going to get much tougher. This is, of course, before any new tariffs are imposed.
"Having effectively achieved his soft landing in 2024, Powell is going to find keeping the economy in that sweet spot will be much harder.”
11am: Wall Street stock cut losses
US stocks had cut their losses after an hour and a half of trading on Wednesday, following jobless and ADP private payrolls data.
The S&P 500, Nasdaq and Dow Jones were all just below flat, while the Russell 2000 sat 1.5% lower.
Earlier gains for Nvidia were cut, however, with none of the Magnificent 7 tech giants moving more than the 0.8% gain for Microsoft.
Biggest fallers in the Nasdaq 100 were Moderna Inc, down 6.3%, followed by discounter Dollar Tree Inc, chip firms Super Micro Computer Inc (NASDAQ:SMCI) and Advanced Micro Devices Inc and cybersecurity group Palo Alto Networks Inc.
10.30am: Jobs data
US initial jobless claims fell to 201K from 211K the week before, below the consensus forecast of 215K.
Continuing claims rose to 1,867K, from a downwardly-revised 1,834K, above the consensus estimate of 1,860K.
Other jobs data from ADP saw a 122K increase in private payrolls in December, below the consensus forecast of 139K. November’s increase was unrevised at 146K.
The 7% increase in unadjusted initial claims in the first week of 2025 was much smaller than the 23% and 18% increases in 2023 and 2024, "but the data are always extremely volatile at the turn of the year, so little weight should be placed on any singular number", says economist Samuel Tombs at Pantheon Macroeconomics.
The four-week rolling average of claims fell to the lowest since late April, but Tombs said he thinks the seasonal adjustment process is "adapting too slowly to the emerging tendency in recent years for lower peaks in layoffs in the winter and a higher concentration in the summer".
He noted that most forward-looking indicators continue to point to an increase in jobless claims ahead, including a spike in the number of positions covered by a WARN layoff notice and Challenger layoff announcements were 13% higher in the three months to November than in the previous 12 months.
December data are released tomorrow.
Tombs said the ADP’s estimate of private payroll growth "slightly bolsters" his 120K forecast for the official non-farm payrolls release on Friday.
"Almost 80% of the increase in employment was driven by firms employing 500 or more people, adding to evidence that small businesses are under the most financial pressure," he added, while noting that the recent track record of ADP's data has been very poor.
"Accordingly, the scope for a large surprise on Friday remains just as large as normal."
9.55am: US stocks open lower, Nasdaq flat
US stocks have continued their pullback in early trading on Wednesday, led by smallcaps.
The Russell 2000 index dropped 1.3% in early trading, while the S&P 500 dropped 0.2% and the Dow Jones 0.4%.
Helped by a rebound for Nvidia Inc of 1.5%, followed by gains for Microsoft Corp (NASDAQ:MSFT), the Nasdaq index was roughly flat.
8.35am: Trump mulls emergency tariff measure
The rebound in the dollar looks to have followed a statement from President-Elect Donald Trump that he is "mulling a national emergency declaration to allow for new tariff program".
Traders are finding in recent days they again need to pay close attention to everything that emerges from Trump, says market analyst David Morrison at Trade Nation.
In currency markets, a rise in the USD has sent the GB pound almost 1.1% lower to 1.234, the lowest since last April, while the DXY dollar index is at the highest levels since October 2022.
Financial markets, especially US equities, have been "skittish" so far this year, says Morrison.
"This is fairly typical when markets trade near extremes, whether around all-time highs, or after significant sell-offs," he says.
"Market participants become aware that the path of least resistance is no longer as obvious as it was before. This leads to overreactions to otherwise minor events and announcements, exactly as seen over the last two trading sessions."
He says for today, "much will depend on the market reaction to today’s ADP payroll report, weekly unemployment claims and minutes from last month’s FOMC meeting".
7.50am: S&P and Nasdaq to extend pullback
Wall Street stocks have been called lower on Wednesday as pressure from bond markets is set to weigh on equities for another session.
Futures for the S&P 500 and Nasdaq 100 pointed to a 0.3% decline, with Dow Jones futures indicating a dip of 0.15%.
Last night in New York, the S&P fell 1.1% and the Nasdaq dropped 1.9% as tech titans led the retreat, with Nvidia tumbling 6.2% the biggest faller, followed by Super Micro Computer and Tesla.
The Dow fell 0.4% and the Russell 2000 dropped 0.7%.
Yesterday also saw Bitcoin drop back after its surge back above $100,000 earlier in the week, pulling back to $95K this morning.
The pullback in stocks was due to a continued pivot in bond markets over whether the US Federal Reserve can cut rates in 2025, market analysts said, with a sharp reassessment yesterday following the ISM services print, where the prices paid indicator surged to its highest in almost two years, and the JOLTS report for November showed job openings were up to a six-month high.
There has been a growing view that there may be no Fed cuts this year, said Deutsche Bank macro strategist Jim Reid, due to inflation emerging.
Fed funds futures pushed back the probability of another cut by the March meeting falling from 44% on Monday to 41% by the close, with the total amount of cuts priced by December’s meeting falling too.
This morning, US bond yields rose, mostly at the longer end, with the 10-year and 30-year Treasuries spiking.
The US dollar also rebounded, with the DXY index climbing 0.6% as the greenback fought back against the euro, pound and others.