Risk sentiment on Wall Street weakened during morning trading on Wednesday, following significant gains in the previous session. This shift occurred due to higher-than-expected producer inflation, which reignited concerns ahead of the crucial consumer inflation report scheduled for Thursday.
Traders were eagerly awaiting the release of the Federal Reserve Open Market Committee (FOMC) meeting minutes at 2:00 p.m. ET, in hopes of gaining more insight into the positions of committee members.
Recent statements from Fed officials have suggested a potentially more dovish stance, indicating a possible pause in the ongoing interest rate hike campaign. However, remarks from Michelle Bowman on Wednesday hinted at the possibility of additional rate hikes to combat inflation.
In the Middle East, the geopolitical situation has become increasingly complex. Israel has been making preparations for a siege of Gaza, while Iran, Lebanon, and Syria have condemned the actions of the Israeli Defense Forces.
Meanwhile, the bond market experienced a rally after weeks of rising yields. The 10-year Treasury, as tracked by the US Treasury Note ETF (NYSE: UTEN), saw a 0.6% rise during the session, resulting in a 7-basis point drop in yields to 4.58%. The 30-year Treasury, closely monitored through the iShares 20+ Year Treasury ETF (NASDAQ: TLT), surged by 1.8% in the session, leading to a 10-basis point decrease in yields to 4.73%.
Key takeaways from Wednesday’s trading include the S&P 500 easing by 0.1% after a 0.5% rise on Tuesday, the Dow Jones Industrial Average showing a similar performance, and tech stocks in the Nasdaq 100 gaining 0.2% on the day. Small caps in the Russell 2000 fell by 0.6%.
In terms of major US equity ETFs, the SPDR S&P 500 ETF Trust (NYSE: SPY) was 0.1% lower, the SPDR Dow Jones Industrial Average ETF (NYSE: DIA) fell 0.2%, and the Invesco QQQ Trust (NASDAQ: QQQ) fell 0.3%, according to Benzinga Pro data.
Among the S&P 500’s sector ETFs, the Energy Select Sector SPDR Fund (NYSE: XLE) saw a 1.7% decrease for the second day in a row, while the Real Estate Select Sector SPDR Fund (NYSE: XLRE) outperformed with a 1% increase.
In terms of individual stocks, Novo Nordisk A/S (NYSE: NVO) rose over 6% after discontinuing a trial for a diabetes treatment, leading to a 20% drop in shares of kidney dialysis company DaVita, Inc. (NYSE: DVA). Eli Lilly and Company (NYSE: LLY) reached fresh all-time highs with a 3% increase, while Exxon Mobil Corp. (NYSE: XOM) fell over 4% following a major acquisition deal with Pioneer Natural Resources.
German shoemaker Birkenstock (NYSE: BIRK) made its debut on the NYSE, and the company priced its initial public offering at $46 per share.
In commodities, WTI crude oil fell 1.4% to $83 per barrel, while gold rose 0.8% to $1,874 per ounce and silver increased by 0.7% to $21.99 per ounce. Bitcoin (CRYPTO: BTC) was 2.7% lower at $26,646.
The US dollar saw a slight increase, with the U.S. dollar index up 0.1%, and the EUR/USD pair remained flat at 1.0603.
European equity indices had a positive session, with the SPDR DJ Euro STOXX 50 ETF (NYSE: FEZ) rising 0.3%.