The S&P 500 and S&P/TSX Composite Index ended nearly flat on Wednesday, giving back earlier gains after Federal Reserve Chair Jerome Powell said inflation in goods prices is expected to go up over the summer as President Donald Trump’s tariffs work their way to consumers.
The U.S. central bank left interest rates unchanged, as expected. In the statement, policymakers maintained expectations for two cuts this year, but a rising minority expected no rate cuts at all. Also, they slightly slowed the expected pace to a single quarter-percentage-point cut in each of 2026 and 2027.
Stocks were moderately higher before Powell’s comments. As he spoke, U.S. Treasury yields also pared most of their earlier drop.
Powell’s “message was consistent with what has been telegraphed. Inflation is still elevated, but tariffs in the coming months will be a wild card. Powell said if not for tariffs he would be cutting rates now,” said Sahak Manuelian, managing director of global equity trading at Wedbush Securities in Los Angeles.
Investors also have been closely watching developments in the Middle East. Some worry about the possibility of a more direct U.S. military involvement in the Israel-Iran aerial war.
Iranian Supreme Leader Ayatollah Ali Khamenei rejected Trump’s demand for unconditional surrender. Trump said his patience had run out, though he did not indicate what his next step would be.
Early in the day, initial jobless claims data showed the number of Americans filing new applications for unemployment benefits fell last week, but stayed at levels consistent with a further loss of labor market momentum in June.
The Dow Jones Industrial Average fell 44.14 points, or 0.10%, to 42,171.66, the S&P 500 lost 1.85 points, or 0.03%, to 5,980.87 and the Nasdaq Composite gained 25.18 points, or 0.13%, to 19,546.27.
Energy led declines among S&P 500 sectors, while information technology was up the most.
The S&P/TSX composite index rose 0.07% to 26,559.85 points, driven by a rise in information technology, real estate, industrial and healthcare shares. Energy, utilities and mining shares dragged down the composite index.
The conflict has pushed Brent crude oil futures by over US$6 per barrel in the last ten days, but investor reaction to the conflict has been largely limited. Brent crude oil futures were down 0.04% on Wednesday to US$76.42 per barrel while spot gold was down 0.4% at US$3,374.75 an ounce.
Canadian energy and materials indexes were down 1.04% and 0.13% respectively.
On Wall Street, shares of stablecoin issuer Circle Internet rose 33.8% after the U.S. Senate passed a bill to create a regulatory framework for dollar-pegged cryptocurrency tokens known as stablecoins.
Steelmaker Nucor rose 3.3% following a second-quarter profit forecast that came above analysts’ estimates.
Advancing issues outnumbered decliners by a 1.28-to-1 ratio on the NYSE. There were 102 new highs and 55 new lows on the NYSE. On the Nasdaq, 2,613 stocks rose and 1,882 fell as advancing issues outnumbered decliners by a 1.39-to-1 ratio. Volume on U.S. exchanges was 16.48 billion shares, compared with the 17.99 billion average for the full session over the last 20 trading days.
Reuters, Globe staff