S&P 500 Sees Modest Gain as Investors Consider High Yields, Reports Reuters

By Lewis Krauskopf, Ankika Biswas, and Shashwat Chauhan

The market experienced a slight uptick on Wednesday following a volatile trading session as investors considered whether it was time to engage in bargain hunting after a downturn driven by high Treasury yields and uncertainty regarding future interest rates.

Attention was also focused on political developments in Washington, where divisions among lawmakers increased the likelihood of a partial government shutdown by the weekend. This potential shutdown has raised concerns for stock investors who are already facing benchmark Treasury yields that have reached their highest levels in 16 years, following a recent indication from the Federal Reserve of a hawkish approach to interest rates in the long term.

As the S&P 500 index has significantly reduced its year-to-date gains, some investors are speculating that the market may be nearing a bottom. "At some point, people will start to buy stocks for the fourth quarter, and the third-quarter selling might be nearly done," remarked Peter Tuz, president of Chase Investment Counsel. "At a certain level, people are going to get back in, thinking the fourth quarter might offer some good opportunities."

The Dow Jones Industrial Average fell by 68.61 points, or 0.2%, ending at 33,550.27. In contrast, the S&P 500 saw a modest increase of 0.98 points, or 0.02%, to settle at 4,274.51, while the Nasdaq Composite rose by 29.24 points, or 0.22%, to close at 13,092.85. Throughout the day, the S&P 500 fluctuated, gaining as much as 0.4% and dropping by 0.8% before recovering losses.

Among the S&P 500 sectors, utilities, sensitive to interest rates, experienced the largest decline, falling by 1.9%. Meanwhile, energy stocks rose by 2.5%, benefiting from oil prices surpassing $97 a barrel, which poses a renewed inflationary risk after a period of moderation.

Despite the S&P 500’s roughly 7% decline since late July, it remains up over 11% for the year. "Investors are looking for a turning point," stated Art Hogan, chief market strategist at B. Riley Wealth. "Clearly, it is not going to take much of a breath of fresh air in this market for people to chase this."

In Washington, Republican U.S. House Speaker Kevin McCarthy dismissed a provisional funding bill making progress in the Senate, edging the government closer to its fourth partial shutdown in a decade. On the economic front, new data revealed a rise in orders for long-lasting U.S. manufactured goods in August, with business investment in equipment showing signs of recovery after an early-quarter slowdown.

As investors await Friday’s release of the monthly personal consumption expenditures price index for further insights on inflation, this week will also include the second-quarter Gross Domestic Product data and comments from Federal Reserve Chair Jerome Powell.

In corporate news, Costco Wholesale shares rose by 1.9% after the retailer exceeded market expectations for quarterly revenue and profit. On the NYSE, the number of declining issues was nearly equal to that of advancing ones, with 56 new highs and 440 new lows recorded.

On the Nasdaq, advancing issues outnumbered decliners by a ratio of 1.1 to 1, with 35 new highs and 333 new lows. Approximately 10.9 billion shares exchanged hands on U.S. exchanges, surpassing the 10.2 billion daily average seen over the last 20 sessions.