Wall Street closed lower on Wednesday, pulled down by utilities and discretionary stocks. Investor mood was downbeat on what was revealed in the Fed minutes from their May meeting. All three benchmark indexes closed the session in the red.
The Dow Jones Industrial Average (DJI) slid 0.6%, or 244.95 points, to close at 42,098.70. Twenty-six components of the 30-stock index ended in negative territory, while four ended in positive.
The tech-heavy Nasdaq Composite lost 98.23 points, or 0.5%, to close at 19,100.94.
The S&P 500 fell 32.99 points, or 0.6%, to close at 5,888.55. Ten of the 11 broad sectors of the benchmark index closed in the red. The Utilites Select Sector SPDR (XLU), the Materials Select Sector SPDR (XLB), the Energy Select Sector SPDR (XLE) and the Consumer Discretionary Select Sector SPDR (XLY) declined 1.4%, 1.4%, 1.3% and 0.9%, respectively.
The fear-gauge CBOE Volatility Index (VIX) increased 1.9% to 19.31. A total of 15.60 billion shares were traded on Wednesday, lower than the last 20-session average of 17.7 billion. Decliners outnumbered advancers by a 2.79-to-1 ratio on the NYSE, while on the Nasdaq, declining issues led by 2.04:1.
Investor sentiment turned considerably cautious on Wednesday following the release of the Fed’s May meeting minutes. The minutes revealed the central bank’s growing concerns about persistent inflation and the potential for stagflation. This was largely attributed to the economic uncertainties stemming from President Trump’s tariff policies.
The Fed’s decision to maintain interest rates between 4.25% and 4.5% reflected a cautious approach, emphasizing a “wait-and-see” stance amid the prevailing economic ambiguities. Officials highlighted that the dual impact of tariffs could simultaneously elevate inflation and suppress economic growth, complicating monetary policy decisions. Per the officials, unemployment could also rise. Â
Also, the minutes revealed concerns about the U.S. potentially losing its status as a global financial safe haven following the announcement of sweeping tariffs. Such shifts in market dynamics signaled to investors a possible erosion of confidence in U.S. assets, further dampening market sentiment.
In light of these developments, major U.S. stock indices experienced declines, reflecting recalibrated expectations regarding the Fed’s monetary policy trajectory and the broader economic outlook. Utilites and discretionares were the worst hit sectors.
Consequently, shares of Edison International EIX and Carnival Corporation & plc CCL fell 3.5% and 2.5%, respectively. Both currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
