The S&P 500 posted a small gain on Wednesday. Traders looked at the chance of future Federal Reserve rate cuts amid ongoing inflation. The broad market index added 0.16%.
It closed at 5,918.25. The Dow Jones Industrial Average slipped 0.06% to 19,478.88. The Nasdaq Composite did better.
It rose 106.84 points, or 0.25%, to end at 42,635.20. Minutes from the Federal Reserve’s latest meeting came out. They showed nearly all committee members thought inflation risks had gone up.
This added to investors’ worries that there may be fewer rate cuts than expected this year. “Participants said the Committee was close to slowing the pace of policy easing,” the minutes read. Bond yields have been climbing.
Investors think President-elect Donald Trump’s tariff and tax plans could cause inflation to spike. Yields went up and down throughout Wednesday’s trading. The rate on the 10-year Treasury note briefly topped 4.7%.
That’s close to levels last seen in late April. Investors are waiting for Friday’s December jobs report. They looked at a lot of economic data this week.
“Forecasters are having a hard time predicting interest rates, growth, and inflation. Trump’s policies are still being worked out,” Jeffrey Roach, chief economist for LPL Financial, said. “Markets could get choppy if there is a surprise in Friday’s payroll release.”
One of the biggest gainers in the S&P 500 in 2024 was down for a third day in a row.
It lost 2.5%. It had risen more than 340% in 2024. Chipmaker Advanced Micro Devices dropped 4.3% after a downgrade by HSBC.
Coca-Cola’s recent stock drop is an overreaction, according to TD Cowen. Shares rose about 1.1% on Wednesday. Analyst Robert Moskow upgraded the stock.
He kept his $75 price target.
traders weigh Fed’s inflation warnings
That suggests more than 20% upside ahead.
Moskow said Coca-Cola can grow as people in other countries drink more beverages. The company’s stock has lost about 12% in the last three months. Concentration is a key risk to start 2025, Barclays said.
Much of the market’s gains depend on how a few mega-cap tech companies do. “The percentage of S&P 500 companies beating the index rose to the highest level in over a year by October. But it fell sharply over the final two months of 2024,” Venu Krishna, head of U.S. equity strategy at Barclays, wrote.
“Big Tech is now 29.3% of the S&P 500 by weight. It made up half of the index’s gains last year, down slightly from 2023’s 56%.”
Quantum computing stocks plunged after Nvidia CEO Jensen Huang spoke. On Tuesday, he said useful quantum computers are probably 15 to 30 years away, most likely around 20 years.
D-Wave Systems tanked 47%. IonQ and Rigetti Computing each dropped 44%. Fed minutes showed officials were worried about how Trump’s policies could impact inflation.
“Almost all participants thought inflation risks had gone up,” a summary read. “Participants said the Committee was close to slowing the pace of policy easing.”
Edison International shares fell by more than 12.5%. Thousands are fleeing wildfires in the Los Angeles area.
Homes and infrastructure are being destroyed. The drop put the California utility on track for its worst trading day since March 2020. Constellation Energy shares tumbled over 5% Wednesday afternoon.
A report said the power company is close to buying Calpine Corp for $30 billion including debt. Constellation is the largest U.S. nuclear plant operator. Calpine is a private company that runs natural gas and geothermal plants.
EBay was among the stocks making big moves midday. Shares jumped 9.7% to 52-week highs. The company said Facebook buyers will be sent to eBay to complete purchases.
By the close of trading Wednesday, the markets had inched forward. Investors remain cautious as they look at new economic data. They continue to respond to signals from the Federal Reserve about future monetary policies.
