US Stocks Mixed Amid Economic Uncertainty and Fed Meeting Minutes
US stocks showed a mixed performance on Wednesday, with investors processing two major developments: President-elect Donald Trump’s consideration of declaring a national economic emergency to implement proposed tariffs, and minutes from the Federal Reserve’s December meeting suggesting that many officials favored a gradual approach to interest rate cuts in 2025.
The S&P 500 (^GSPC) rose slightly by 0.1%, while the Dow Jones Industrial Average (^DJI) gained 0.25%, or roughly 100 points. The Nasdaq Composite (^IXIC) ended the day just below the flat line.
Treasury yields, particularly the 10-year Treasury yield (^TNX), held steady at 4.7%, as investors awaited the upcoming December jobs report, scheduled for release on Friday.
Trump’s potential use of emergency powers to justify his proposed tariffs stirred concerns in the market, as CNN reported that these tariffs would be wide-reaching. Investors, already on edge with Inauguration Day approaching, are bracing for a wave of new policies and executive orders from the incoming administration.
Meanwhile, investors are focusing on the Federal Reserve’s policy stance, particularly in light of recent data. A surge in bond yields and a selloff in stocks on Tuesday followed stronger-than-expected service sector and labor market reports, which reignited concerns about persistent inflation. The data has led traders to reduce expectations of rapid interest rate cuts, with the likelihood of a rate reduction before May now seen as less than 50%, according to the CME FedWatch tool.
Some analysts suggest that if economic data continues to outperform, markets could shift back to expecting a “higher for longer” interest rate environment.
In the labor market, US private companies showed signs of slowing hiring growth in December, while the number of jobless claims unexpectedly fell last week, indicating a stable employment landscape.
The report was released a day earlier due to the national day of mourning for former President Jimmy Carter, during which both government offices and the stock market will be closed on Thursday.
