The Dow Jones Industrial Average fell by 45.66 points, or 0.12 percent, to 37,753.31. The S&P 500 sank 29.20 points, or 0.58 percent, to 5,022.21. The Nasdaq Composite Index shed 181.88 points, or 1.15 percent, to 15,683.37.
Seven of the 11 primary S&P 500 sectors ended in red, with technology and real estate leading the laggards by losing 1.71 percent and 0.80 percent, respectively. Meanwhile, utilities and consumer staples led the gainers by rising 2.08 percent and 0.46 percent, respectively.
The Federal Reserve's Beige Book, which was published Wednesday, suggests a slight expansion in U.S. economic activity from late February through early April. However, there were concerns among businesses that progress in lowering inflation could stall. This ongoing trend has prevented the central bank from considering interest rate cuts. "On balance, contacts expected that inflation would hold steady at a slow pace moving forward," the report said.
The St. Louis Fed noted that inflation pressures had "increased modestly," leading to compressed profit margins for small businesses as they struggled to pass on price increases to consumers. Meanwhile, the Philadelphia Fed reported that inflation persisted at a "slight pace," highlighting increased price sensitivity among customers. This sensitivity hindered some contacts from passing on rising input prices effectively.
The survey's findings came a day after Fed Chair Jerome Powell revised previous guidance on potential rate cuts. He emphasized the need for a longer period of restrictive monetary policy due to consistently strong inflation readings that surpassed expectations.
U.S. Treasury yields slipped from their highest levels in five months on Wednesday amid a round of dip buying in government debt that dominated much of the session. The 10-year yield fell 8 basis points to 4.593 percent, while the 30-year rate dropped by 6.2 basis points to 4.705 percent.
"The combination of geopolitical uncertainty, rising interest rates, Fed hawkishness and inflation frustration have combined to put bears temporarily in charge," said Mark Hackett, Nationwide Financial's chief of investment research. "The rapid change in investor sentiment and behavior reflects a notable shift from the patterns since October, setting the stage for an extended period of sideways volatility."
The strong start to the new earnings season was overshadowed by concerns about inflation. Although less than 10 percent of S&P 500-listed companies have reported financials so far, more than three-quarters have exceeded Wall Street expectations, according to FactSet.
United Airlines saw a notable climb of more than 17 percent after reporting a narrower-than-expected loss and beating revenue estimates. Conversely, J.B. Hunt Transport Services experienced a more than 8 percent drop after falling short of analysts' expectations on both revenue and earnings.
Latest comments