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U.S. stocks slipped on Wednesday, as a record-setting rally took a breather after a string of gains over the past week.
The Dow Jones Industrial Average (^DJI) fell more than 1.2%, while the tech-heavy Nasdaq Composite (^IXIC) and S&P 500 (^GSPC) sank about 1.5%. The down day marked the S&P's worst single-day performance since October, while it also snapped a nine-day winning streak for the Nasdaq and Dow Jones.
Stocks had been building on a strong year-end rally, with Tuesday's finish giving the Dow its fifth record close in a row and bringing the S&P 500 closer to its all-time high set in January 2022. Investors have shrugged off hawkish comments from Federal Reserve officials, who have tried to temper expectations that the central bank will quickly turn to bringing down benchmark rates.
On Wednesday, a surprise drop in UK inflation to its lowest level in two years lifted optimism that price pressures are easing in leading economies, with an easing in German wholesale inflation also reinforcing that view. Bond yields added to this month's slide, with the 10-year Treasury yield (^TNX) retreating under 3.9%.
But some are questioning whether the faster, earlier rate cuts envisaged would end up pushing the US economy into a downturn. Eyes will be on upcoming data for clues as to whether the Fed can nail a "soft landing." Thursday brings an update on GDP, and on Friday comes a reading on PCE inflation, the Fed's preferred gauge.
In individual corporates, FedEx (FDX) shares tumbled more than 10% after the delivery company missed quarterly profit expectations. It also cut its full-year revenue forecast amid a drop in US Postal Service demand.
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