US stocks today: US stocks end near flat as hot inflation data clouds Fed rate outlook

Wall Street's main indexes ended nearly flat on Wednesday as hotter-than-expected U.S. inflation added a fresh wrinkle to the Federal Reserve's policy outlook as investors remained cautious in view of Nvidia earnings and the prolonged Iran war.

The S&P 500 slipped 0.01% to 7,676.29, while the Nasdaq Composite fell 0.06% to 26,136.18. The Dow Jones Industrial Average declined 0.21% to 53,463.88.

Data from the Commerce Department showed annual U.S. inflation rose 3.7% in the 12 months through July, slightly above expectations. Separate data showed the economy grew 1.5% in the second quarter, underscoring the resilience of the U.S. economy even as price pressures remain elevated.


The inflation reading was not enough on its own to shift the balance for the Fed's September meeting, but it added to the importance of the economic data still to come. Investors are now looking to Fed Chair Kevin Warsh's speech at Jackson Hole on Friday for clues on how policymakers are assessing the path for interest rates.

"It wasn't enough to shift the balance for September's meeting, but if subsequent data point in the same direction, the Fed may feel more pressure to move off the sidelines," said Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management.

The Fed's September decision is coming into focus at a time when markets are already sensitive to higher borrowing costs and inflation expectations. The odds of an interest rate hike at the meeting stand at 38.1%, according to the CME FedWatch tool.

"There is no crisis, it is more about expectations or guidance we are going to get from the Fed and what the Treasury is trying to do. That blends to some uncertainty and basically increases the risk premium," said Greg Tuorto, head of U.S. small and midcap investing at Goldman Sachs Asset Management.

Still, Tuorto pointed to the strength of the underlying economy and corporate earnings as a counterweight to those concerns, saying earnings among companies owned by the firm and some larger-cap companies were "standout."

Elsewhere, healthcare stocks were the biggest laggards on the S&P 500. Moderna fell sharply after a strong gain on Tuesday, although the stock remained well above levels seen before the company disclosed late-stage cancer vaccine trial data last week alongside Merck.

Among megacap stocks, Meta rose after agreeing to pay up to $18 billion and make major changes to Facebook and Instagram to resolve claims by U.S. states that the platforms harmed children. Apple also gained.

Intuit shares fell after the TurboTax maker forecast annual revenue below Wall Street expectations, while J.M. Smucker gained after forecasting a smaller-than-expected decline in annual sales.

Markets are also watching the broader interest-rate backdrop. Concerns over stubbornly high oil prices, rising government debt and inflation expectations had pushed Treasury yields to multi-year highs last week, although yields retreated after the Treasury Department announced support measures.

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times)