Stocks swiftly recovered from an early dip to spend the majority of Wednesday in positive territory. Nonetheless, investors' energy dwindled towards the end of the session, resulting in the primary averages closing the day with minimal fluctuations.
Though the Dow Jones fell slightly by 43.10 points, marking its third consecutive decline, both the S&P 500 and the Nasdaq enjoyed small rises. The turnaround in Wall Street's fortunes was sparked by an unexpected deceleration in U.S. service sector growth in March, as revealed in a report by the Institute for Supply Management (ISM).
While the service sector continues to grow, as indicated by the ISM's Product Manager Index (PMI) remaining above 50, the pace dipped from 52.6 in February to 51.4 in March. Notably, the rate of price growth in the sector also slowed dramatically, with the prices index falling to its lowest since March 2020. This eased some concerns about future interest rates, which had contributed to a significant fall in stocks on Tuesday.
There were concerns that robust private sector job growth in the U.S. for March, as reported by payroll company ADP, suggested the Federal Reserve might delay lowering interest rates. In related commentary, Fed Chair Jerome Powell confirmed that the central bank is in no rush to drop rates, citing wanting to have greater confidence in inflation decreasing sustainably towards 2 percent before doing so.
The fractional decrease in the Dow Jones was partly due to Intel's shares dropping significantly. This followed the semiconductor giant announcing an operating loss for its semiconductor manufacturing business in 2023, more extensive than in the previous year.
However, solid performances were visible in the gold stocks and computer hardware sectors, with considerable strength also noted among energy and housing stocks. Gold prices reached a new record, propelling gold-related stocks. Meanwhile, a rise in crude oil also boosted energy stocks.
In the global markets, most Asia-Pacific stock markets experienced a decline while European markets enjoyed a slight hike. U.S. treasuries bounced back from their early dip to end the day marginally positive.
Moving forward, weekly jobless claims and the U.S. trade deficit reports due on Thursday may draw attention, though trading activity could be somewhat subdued in anticipation of Friday's crucial monthly jobs report.
