Stocks posted modest gains in two major indexes on Wednesday despite an uninspiring economic report and ominous comments from the president-elect.
The S&P 500 ended the day up 0.2%. The Dow Jones Industrial Average ended up 0.3%. The tech-heavy Nasdaq fell 0.1%. The price of Bitcoin fell by about 3% and remained well below $100,000.
Stocks barely rose as traders shrugged off a day of mostly grim economic news.
Minutes of the Fed’s December meeting released show that the committee believes inflation could persist. The minutes of the meeting mention the “recent rise in inflation” and the “high degree of uncertainty” surrounding new economic indicators. Inflation rate rose for the second consecutive month.
All told, the word “uncertainty” appeared nine times in the Fed minutes, not a reassuring sign for forecasters.
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“Inflation is the wild card in 2025. There are a lot of things that could potentially put inflation back on the upswing,” Charlie Ripley, senior investment strategist at Allianz Investment Management, told Reuters.
Earlier, a private sector employment report released by payments processor ADP showed a slowing pace of job creation and slower wage growth in December.
“The labor market shifted down to a slower pace of growth in the final months of 2024, with both employment and wage growth slowing,” said Nela Richardson, chief economist at ADP.
And President-elect Donald Trump may declare a “national economic emergency” to authorize import tariffs, CNN reported. Once a state of emergency is declared, he will be relatively free to tax imports.
The news surprised investors who were already eyeing an unexpected economic upturn as Inauguration Day approached.
Tariffs could raise prices for U.S. consumers and spark new inflation. And investors are losing confidence that the Federal Reserve will cut interest rates at its January meeting. The combination of rising interest rates and inflation can create problems for the economy.
Forecasters almost unanimously expect the Fed to not cut more rates at its January meeting after a series of rate cuts late last year.
The stock market will be closed Thursday for National Day of Remembrance for the late President Jimmy Carter.
Contributed by: Reuters
