U.S. stocks traded mixed on Wednesday after hitting record highs as investors looked to upcoming data for clues about the health of the economy and the possibility of further big interest rate cuts.
The Dow Jones Industrial Average (^DJI) fell about 0.4%, reversing the previous day’s gains, while the S&P 500 Average (^GSPC) maintained its upward momentum, rising about 0.1% after both major indexes closed at all-time highs. The tech-heavy Nasdaq Composite Index (^IXIC) rose about 0.4% after initially opening lower.
With unexpectedly weak consumer confidence figures raising concerns, the question is now whether the US economy could slip into recession. The debate revolves around whether the slowdown prompted the Federal Reserve to cut interest rates by a larger than usual 0.5% and how a further recession could affect further, larger rate cuts that are expected.
read more: How the Fed’s rate cut impacts bank accounts, CDs, loans, and credit cards
In terms of data, new home sales Decline in August Home prices surged last month as extremely high mortgage rates and rising prices meant buyers were mainly on the sidelines.
But mortgage applications surged to the highest level since 2022, according to MBA data released before the close of trading. The increase was driven by homeowners looking to refinance their loans as interest rates fell.
But attention is certainly on Thursday’s second-quarter GDP release and Friday’s key PCE reading (the Fed’s preferred inflation gauge).
The parade of Fed speakers continues with Governor Adriana Kugler, whose remarks will be similarly scrutinized for insights into the size and pace of upcoming rate cuts when she takes the stage later Wednesday.
Meanwhile, the boost to markets from China’s massive stimulus package has faded amid growing skepticism about whether the measures will be successful in reviving the economy.
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