The S&P 500 and Nasdaq Composite were little changed on Tuesday as investors assessed the state of the U.S. economy, a day after the tech-heavy Nasdaq closed at a record high.
The broad S&P 500 hovered near the flatline, while the Dow Jones Industrial Average gained 37 points, or 0.1%.
Investor concerns grew after the Bureau of Labor Statistics significantly revised its jobs figures, lowering total payroll gains for the 12 months through March by 911,000. The revision was not only larger than Wall Street anticipated but also the largest on record since 2002. While the six-month-old data had a minimal immediate impact on stocks, it may bolster calls for the Federal Reserve to implement more aggressive interest rate cuts.
“The jobs picture keeps deteriorating and while that should make it easier for the Fed to cut rates this fall, it could also throw some cold water on the recent rally,” said Chris Zaccarelli, chief investment officer at Northlight Asset Management.
Wall Street was coming off a strong session where gains from key chipmakers, including Broadcom and Nvidia, propelled the Nasdaq to its all-time high. Broadcom shares reversed course on Tuesday, falling 2% after strong gains in the previous two sessions, though the stock remains up 13% for the week.
Market participants are now bracing for two key inflation reports that could influence the Federal Reserve’s policy decisions at its meeting next week. The August producer price index is due Wednesday, followed by the consumer price index on Thursday.
“If the CPI shows a worsening trend of higher inflation on Thursday then the market will begin worrying about stagflation,” Zaccarelli added. “The bull market has been extremely resilient this year, but we could be approaching an inflection point where it is tested again.”
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