The Dow Jones Industrial Average ended Wednesday modestly lower as stocks struggled to shake off their second-quarter malaise.
The 30-stock Dow fell 43.10 points, or 0.11%, to close at 39,127.14, marking its third straight negative day. The S&P 500 inched higher by 0.11% to finish at 5,211.49 for its first winning session of the week. The Nasdaq Composite traded up by 0.23%, ending at 16,277.46.
The Dow was hurt by a decline of more than 8% in Intel after the company posted operating losses in its semiconductor manufacturing business. Artificial intelligence darling Nvidia swung into the red despite trading higher for much of Wednesday, also restricting gains for the market. But several megacap technology stocks offered the market some support, with Netflix rising 2.6% and Meta Platforms advancing roughly 1.9%.
Higher rates continued to weigh on stocks. ADP data released Wednesday showed private payrolls grew more than expected in March. It offered another sign of resiliency in the economy as investors grow increasingly concerned about the path of interest rate cuts from the Federal Reserve.
Fed officials also threw cold water on the possibility of rates coming down sooner rather than later. Atlanta Fed President Raphael Bostic told CNBC Wednesday morning he only sees one move lower this year, sometime in the fourth quarter. Fed Chair Jerome Powell said in the afternoon that the central bank needs more evidence of easing inflation before lowering the cost of borrowing money.
Traders see a nearly 99% likelihood that rates remain unchanged at the Fed's May policy meeting, according to the CME FedWatch Tool as of Wednesday afternoon. Fed funds futures trading data suggests a 62.3% probability of a cut at the June gathering, a significant decline from the 70.1% figure seen a week ago.
The rate on the U.S. Treasury 10-year note briefly touched its highest level since November. Oil surged to its most expensive prices going back to October.
Some market observers remain optimistic overall despite the rough start to the quarter, saying stocks are due for some consolidation. The first quarter, which concluded last week, was the best for the S&P 500 since 2019.
"The invincible stock market of the past five months is the exception, not the norm," said Yung-Yu Ma, chief investment officer at BMO Wealth Management.
"It's certainly possible that the goldilocks narrative of high growth and falling inflation could return within a couple of months," Ma said. "But it's also possible to have choppier markets that take time to digest its recent gains and allow fundamentals to catch up with valuations."