Traders work on the floor of the New York Stock Exchange.
U.S. stock futures fell slightly Wednesday, following a winning session for the major averages.
Dow Jones Industrial Average futures lost 49 points, or 0.1%. S&P 500 futures and Nasdaq-100 futures slipped 0.1% and 0.2%, respectively.
Wall Street is coming off a strong session for the major averages as tech stocks outperformed, and oil prices eased off their highs. The 30-stock Dow gained 126 points, or 0.3%. The S&P 500 rose nearly 1%, while the Nasdaq Composite rallied about 1.5%.
Alphabet shares were down more than 1% as the Department of Justice indicated it was considering a possible Google breakup.
Those moves seem to reflect growing optimism the Federal Reserve can navigate a soft landing, especially after last week's jobs report showed continued strength in the labor market. Artificial intelligence beneficiaries Nvidia and Broadcom rallied 4% and 3%, respectively.
"I think technology is going to reassert its leadership," Keith Lerner, Truist Wealth co-chief investment officer, said Tuesday on CNBC's "Closing Bell." "The earning trends in tech is still the strongest in the market that we have. And I think we'll see more of a rotation back into that area."
"So, net-net, of course, we're going to see some hiccups up along the way," Lerner said. "But, in our view, the underlying trend is still one that moves up over time."
Money Report
Regardless, there could be further choppiness in what's historically the most volatile month of the year, particularly just a few short weeks out from the U.S. presidential election. Oil prices dropped Tuesday, after rising earlier this month amid an escalation of conflict in the Middle East. Meanwhile, the 10-year U.S. Treasury yield has climbed back above 4%.
On the economic front, investors are anticipating the latest meeting minutes from the Fed on Wednesday, due at 2 p.m. ET. The September consumer and producer price index readings are due out Thursday and Friday, respectively.
Earnings season kicks off Friday with the big banks JPMorgan Chase and Wells Fargo.
Alphabet falls as DOJ considers Google breakup
Alphabet shares were down more than 1% after the U.S. Justice Department indicated it was considering a breakup of the tech giant following a monopoly ruling.
The changes are necessary to "prevent and restrain monopoly maintenance could include contract requirements and prohibitions; non-discrimination product requirements; data and interoperability requirements; and structural requirements," the department said in a filing.
— Fred Imbert
European markets strengthen after lackluster open
European markets edged higher on Wednesday after a lackluster start to the day, with defensive sectors, including utilities, food and beverage and healthcare, in positive territory.
Defensive sectors tend to perform better in times of economic uncertainty, with market participants assessing the risks of Chinese market volatility, conflict in the Middle East and the trajectory for central bank interest rate cuts and inflation.
Mid-morning, the Stoxx 600 index was trading 1% higher, as all sectors rose except for banks, which dipped by 0.3%.
Looking at individual stocks in Europe, the biggest losers on the pan-European Stoxx index were pharmaceutical and biotechnology company Bayer, which was down 6.4%, along with Dutch lender ING, which shed 3%.
The best performer on the index was Continental, up 6.5% after the German car parts maker said on a pre-close call on Tuesday that it expects the profitability of its automotive business to improve in the third quarter despite lower sales, Reuters reported.
— Holly Ellyatt
China's CSI 300 plunges 7%, snapping 10-day winning streak amid mixed trading in Asia
Chinese stocks sold off in a volatile day of trading amid mixed Asia-Pacific markets Wednesday.
The mainland CSI 300 dropped 7.05%, snapping a 10-day winning streak and closing at 3,955.98, while Hong Kong's Hang Seng index tumbled 1.7% as of its final hour of trade in a choppy session.
On Tuesday, the HSI recorded its worst day in 16 years, closing 9.41% lower.
Other Asian markets climbed Wednesday, with Japan's Nikkei 225 rising 0.87% to 39,277.96, and Australia's S&P/ASX 200 edging up 0.13% and closing at 8,187,4.
— Lim Hui Jie
Fed lowered rates to maintain labor market’s strength, says Vice Chair Philip Jefferson
Federal Reserve policymakers sought to keep the labor market strong when they decided to trim the fed funds target range by a half point in September, according to prepared comments from Fed Vice Chair Philip Jefferson.
He spoke at an event at Davidson College in North Carolina on Tuesday night.
"The [Federal Open Market Committee] has gained greater confidence that inflation is moving sustainably toward our 2 percent goal," he said. "To maintain the strength of the labor market, my FOMC colleagues and I recalibrated our policy stance last month, lowering our policy interest rate by 1/2 percentage point."
The target range for the fed funds rate now sits at 4.75% to 5.00%.
Jefferson added that he will "carefully watch incoming data, the evolving outlook, and the balance of risks when considering additional adjustments to the federal funds target range."
—Darla Mercado
Wholesale inventories data due out Wednesday
Wholesale inventories — which refers to the unsold inventory held by wholesalers — is expected to have risen 0.2% in August, according to economists polled by Dow Jones. That's in line with the 0.2% increase in the previous reading.
The data is due out 10 a.m. ET.
— Sarah Min
Stock market risk grows as yield curve steepens, Bank of America says
The risk that stocks will weaken increases as the Treasury yield curve between 2- and 10-year notes steepens, according to Bank of America technical analyst Stephen Suttmeier in a note to clients Tuesday.
The S&P 500, for example, "is vulnerable to bigger corrections when the yield curve is steepening," Suttmeier wrote. "The biggest correction the SPX has had since the yield curve bottomed in June 2023 is the late July 2023 into late October 2023 drop of 10.3%. This compares to the average and median biggest corrections of 26.5% and 20.3%, respectively, during yield curve steepening cycles."
Ten out of the last 12 steepening cycles coincided with U.S. recessions, the analyst noted.
The 10-year Treasury note yielded 4.01% in late trading Tuesday, versus 3.96% for the 2-year. On May 31, the 10-year yielded 4.51% while the 2-year yielded 4.89%.
— Scott Schnipper
U.S. stock futures open lower
U.S. stock futures opened lower Tuesday night.
Dow Jones Industrial Average futures fell by 13 points, or 0.03%. S&P 500 futures and Nasdaq 100 futures dipped 0.05% and 0.06%, respectively.
— Sarah Min
