U.S. stocks traded mixed on Wednesday after the market hit record highs as investors looked to upcoming data for clues about the health of the economy and the possibility of further big interest rate cuts.
The Dow Jones Industrial Average (^DJI) fell about 0.4%, reversing the previous day’s gains, while the S&P 500 Average (^GSPC) rose about 0.1%, maintaining positive momentum after both major indexes closed at all-time highs. The tech-heavy Nasdaq Composite Index (^IXIC) rose about 0.4% after initially opening lower.
The question now is whether the U.S. economy could slip into recession as a surprising weakness in consumer confidence fuels concerns. The debate centers on whether the slowdown prompted the Federal Reserve to cut interest rates by a larger than usual 0.5% and how a further recession might affect further, larger cuts that are expected.
Read more: How the Federal Reserve’s rate cut will affect your bank accounts, CDs, loans and credit cards
On the data front, new home sales fell in August following a sharp increase the previous month as sky-high mortgage interest rates and soaring home prices discouraged most buyers from purchasing.
But mortgage applications surged to the highest level since 2022, according to MBA data released before the close of trading. The increase was driven by homeowners looking to refinance their loans as interest rates fell.
But attention is certainly on Thursday’s second-quarter GDP release and Friday’s key PCE reading (the Fed’s preferred inflation gauge).
The parade of Fed speakers continues with Governor Adriana Kugler, whose remarks will be similarly scrutinized for insights into the size and pace of upcoming rate cuts when she takes the stage later Wednesday.
Meanwhile, the boost to markets from China’s massive stimulus package has faded amid growing skepticism about whether the measures will be successful in reviving the economy.
Live2 Update
Wednesday, September 25, 2024 at 7:19 AM PDT
New home sales fall in August
Extremely high mortgage rates and soaring home prices have largely discouraged buyers from making purchases, and new home sales fell in August following a sharp increase the previous month.
Sales of new single-family homes fell 4.7% from the previous month to an annualized rate of 716,000, according to government data released Wednesday morning. However, the drop in sales was smaller than expected, as economists had been expecting a 5.3% decline.
The median sales price fell 4.6% to $420,600, marking the seventh consecutive month of year-over-year price declines. Mortgage rates have also been declining, falling for eight consecutive weeks.
Mortgage applications surged to the highest level since 2022, driven by homeowners looking to refinance their mortgages as interest rates fell, according to MBA data released before the market opened.
Wednesday, September 25, 2024 at 6:35 AM PDT
S&P 500, Dow open higher
The S&P 500 and Dow both started Wednesday in positive territory after each hitting new all-time highs the previous day.
The benchmark S&P 500 (^GSPC) rose about 0.1%, while the Dow Jones Industrial Average (^DJI) added about 0.2%, while the tech-heavy Nasdaq Composite Index (^IXIC) was flat.