Traders work on the ground of the Recent York Stock Exchange during morning trading on January 17, 2023 in Recent York City.
Michael M. Santiago | Getty Images
Stocks gave back earlier gains on Wednesday as investors pulled away from the momentum that has been driving the brand new yr rally.
The Dow Jones Industrial Average fell 284 points, or 0.8%, while the S&P 500 lost 0.5%. The Nasdaq Composite lost 0.3% and was on pace for its first down day within the last eight.
Yung-Yu Ma, chief investment strategist at BMO Wealth Management, attributed the reversal to a mix of skittishness and profit taking.
“We have had such a robust begin to the yr, but now we’re amid a tense earnings season, recently got weaker data — retail sales and yesterday’s Empire State Manufacturing Survey. Plus the Fed meeting on Feb. 1st is looming large,” he said. “There’s not a complete lot of reason to get aggressive here, but all of those aspects above suggest that caution is warranted within the near term.”
The Dow Jones Industrial Average on Wednesday
Microsoft announced plans to put off about 10,000 employees, which hurt investor sentiment. The stock fell and dragged the Dow lower with it. Despite it being a short-term dynamic, it ads to the “air of caution creeping within the markets,” Ma said.
Investors were also digesting the most recent reading on the producer price index, which measures input costs from corporations and could possibly be a number one indicator of future inflation, showed a 0.5% decline for December. Economists surveyed by Dow Jones expected a 0.1% decline. That briefly gave relief to investors who’ve hoped for inflation to retreat and for the Federal Reserve to slow or stop its rate hikes.
Declining prices were also reflected in retail sales, which fell 1.1% in December, barely greater than the 1% forecast.