4:12pm: Record high
The S&P 500 finished Wednesday’s trading session at a new record high, after notching a record closing level the previous day.
The index added 0.2% to close at 6,144 points. The Nasdaq added 0.1% at 20,056 points while the Dow Jones added 0.2% at 44,627 points.
2:35pm: No rate cut in sight
Fed officials remain cautious about cutting interest rates due to persistent inflation risks and economic uncertainty, its January minutes revealed.
The central bank kept its benchmark rate at 4.3%, citing concerns over potential inflationary pressures from President Trump’s proposed tariffs, immigration policy changes, and strong consumer spending.
Nigel Green, CEO of deVere Group, warned that investors expecting imminent rate cuts may be disappointed, as the Fed appears committed to a wait-and-see approach. The minutes suggest policymakers fear that premature cuts could backfire, reinforcing the view that easing will only occur if economic conditions warrant it.
“The minutes from the January policy meeting seem to confirm that officials are in no hurry to ease monetary policy,” said Green.
Market expectations for multiple rate cuts may be overly optimistic, with protectionist trade policies potentially delaying any easing further. The Fed’s stance signals that inflation control remains a priority, making it unlikely that borrowing costs will decline soon.
“The Fed is making it clear, we believe, that inflation remains a risk, and that premature cuts could backfire," added Green. "The reality is that policymakers are still evaluating economic data, and shifting policy, and there’s seemingly no urgency to shift gears.”
1:15pm: Slight pullback
Stocks are experiencing a slight pullback in midday trading, with the S&P 500 down 0.1%, hovering near 6,123. The Dow has fallen 0.5%, while the Nasdaq is down 0.2%.
This minor retreat follows the S&P 500's achievement of a fresh all-time high of 6,130 in yesterday’s session, as investors appear to be taking a breather after recent gains. Market participants are also evaluating ongoing concerns about inflation and potential shifts in policy, which have added to cautious sentiment.
Trading volume remains relatively light, typical for a midweek session, and sector performance is mixed. Technology stocks are showing resilience, providing some support to the broader market, while financials and industrials face modest pressure.
12:10pm: Homebuilding starts
US housing starts fell 9.8% in January to 1.366 million annualized units, missing forecasts, while building permits edged up 0.1% to 1.483 million. Completions surged 7.6%, with multifamily completions tying for the second-highest level since the 1970s. Meanwhile, homebuilder sentiment declined, with the NAHB Housing Market Index falling to 42, and lumber prices hit their highest since 2022 on concerns over potential US tariffs on Canadian imports.
"January’s construction data tells us little about the outlook since weather was obviously a big drag," Bill Adams, Chief Economist for Comerica Bank said.
"That’s visible in how much starts underperformed permits in the month. It’s much easier to file paperwork to build a new house during a snowstorm than to break ground on it.
"However, the latest homebuilder survey does tell us about the outlook, and builders are getting worried.
Homebuilder confidence initially surged after the election but has since declined due to concerns over higher tariffs and stricter immigration policies impacting the industry, Adams noted.
"These policies, as well as expectations for additional tax cuts, have kept mortgage rates above their 2024 averages this year despite the Fed cutting short-term rates in late 2024."
Comerica sees "moderate growth" of homebuilding in 2025.
10:45am: Stocks pull back
US stocks opened lower as investors weighed up president Trump's recent tariff announcement and awaited the release of the Federal Reserve's January meeting minutes, which are expected to provide insights into future monetary policy decisions.
The Dow Jones shed 0.4% at 44,391 points, the Nasdaq traded down 0.3% at 19,979 points, and the S&P 500 was down 0.2% at 6,120 points.
Markets are witnessing how Trump is leveraging tariffs to advance both economic and political agreements, according to City Index market analyst Razan Hilal.
“His latest tariff announcement on auto, drug, and chip exports, combined with his firm stance on Russian sanctions, has put markets on edge,” Hilal said.
“Commodities are reacting to the uncertainty, with the potential for further upside. The tariffs are set to take effect on April 2, leaving a window for negotiations, yet keeping market sentiment cautious.”
9.00am: Declines on Wall Street
Wall Street faced a negative start on Wednesday as traders awaited Federal Open Market Committee minutes later in the day and weighed further tariffs under Donald Trump.
The S&P 500, having closed out Tuesday’s session at a record, fell 0.3% after the opening bell, while the Nasdaq and Dow Jones moved 0.3% and 0.4% lower respectively.
FOMC minutes later on Wednesday, after the central bank held interest in January, have drawn attention as investors gauge the direction of monetary policy ahead.
A string of tariffs since Trump took office have threatened to cloud sentiment, with the latest measures emerging on Tuesday, targeting autos, chips, and pharmaceuticals.
These would be “in the neighborhood of 25%,” the president said, applying to all foreign automakers and starting as soon as April 2.
“Trump’s latest remarks only added to an already jittery market atmosphere this week,” City Index analyst Fawad Razaqzada said, as preliminary talks between the US and Russia over the Ukraine war took place, but without the latter.
6.56am: Wall Street set to drop
Wall Street was on course for a negative start as Wednesday’s session approached, leaving the S&P 500 set to fall from its closing record.
Futures showed the S&P 500 down 0.1% ahead of the opening bell, after the index had finished out Tuesday’s session at an all-time high of 6,129.
The Nasdaq and Dow Jones were seen dropping 0.1% and 0.2% respectively in the meantime after posting slight gains the day before.
Attention on Wednesday turned to Federal Open Market Committee minutes from its January meeting and any insight on the path of interest rates ahead.
“While traders will undoubtedly pick through the comments with a fine tooth comb, the huge uncertainty faced by the FOMC under a Trump presidency means that they are likely to remain highly data dependent,” Scope Markets analyst Joshua Mahony said.
Having held interest in the 4.25% to 4.50% range last month, Mahony added the central bank would likely signal a sit and wait approach as the impact of Trump’s policies emerged.