U.S. stocks were lower Wednesday as Wall Street struggled to hold on to the sharp gains from the last two sessions.
The Dow Jones Industrial Average traded 27 points lower, or 0.1%. Earlier in the day, the Dow was down as much as 429.88 points. The S&P 500 and Nasdaq Composite fell 0.2% and 0.5%, respectively.
“It’s a moment of pause for the market to reflect on how durable the rally the past two days actually could turn out to be,” said Yung-Yu Ma, chief investment strategist for BMO Wealth Management. “The market’s making the assessment that it’s really going to take a lot for the Fed to make a dovish pivot. Yes, the JOLTS number was extremely welcome, no question about that. But that is really the tip of the iceberg in terms of what the Fed needs to actually take a softer tone.”
“There’s some reality creeping into the market and that enthusiasm of a good number is starting to fade,” he added.
Stocks staged a massive rally to start the month, with the S&P 500 posting its biggest two-day gain since 2020, as rates declined from multiyear highs. On Wednesday, though, rates rose sharply, with the benchmark 10-year Treasury yield climbing 14 basis points to 3.761% after briefly dipping below 3.6% in the previous session.
Private payrolls increased by 208,000, ADP said in its latest report, topping a Dow Jones estimate. Traders are looking ahead to Friday’s release of the nonfarm payrolls report. September’s ISM services index also came out Wednesday showing solid growth for the month of September.
Some market participants wondered whether those signs could mean markets have finally priced in a bottom after the sharp declines in the prior quarter.
“Q3 earnings reporting is not too far away and it’s definitely in the market psychology that the Q2 earnings season helped to stabilize the markets,” Ma said. “There was a lot of pessimism in the market that it was able to rally pretty strongly from for a couple of months. Right now there’s also this hope that the earnings season can stabilize the market and maybe come to the rescue again, the way that it did last quarter.”
