Stocks waver on Wall Street ahead of speech by Fed chair

Street signs at the intersection of Wall and Broad Streets are shown in lower Manhattan, Wednesday, Oct. 13, 2021. (AP Photo/John Minchillo, File)

Stocks wavered in afternoon trading on Wall Street Wednesday ahead of a speech by Jerome Powell, the chair of the Federal Reserve, on the outlook for the economy and inflation.

The S&P 500 fell 0.2% as of 1:23 p.m. Eastern, on pace for its fourth straight drop. The Dow Jones Industrial Average fell 159 points, or 0.5%, to 33,692 and the Nasdaq rose 0.3%.

Major indexes have been unsteady as the economy and financial markets deal with stubbornly hot inflation and the Fed's attempt to cool high prices with aggressive interest rate increases. Still, the benchmark S&P 500 and the Dow are solidly on track to close out November in the green, which would mark their second straight monthly gain.

Treasury yields gained ground. The yield on the 10-year Treasury, which influences mortgage rates, rose to 3.77% from 3.75% late Tuesday.

U.S. crude oil prices climbed 2.6%.

Banks and industrial companies fell, weighing down the broader market. Bank of America slipped 1.1% and 3M slid 3.1%.

Those losses offset gains in technology and communication stocks. Intuit rose 4.8% and Netflix gained 3.5%.

Markets in Asia and Europe were mostly higher.

Investors will be closely watching a speech Wednesday afternoon by Powell at the Brookings Institution for clues as to what the central bank will do next in its fight against inflation. The central bank has raised its benchmark rate to 3.75% to 4%, up from close to zero in March.

The goal is to make borrowing more difficult and generally slow the economy in order to tame inflation. There's a risk the Fed could slow the economy too much and send it into a recession.

The economy has been slowing, but contains strong pockets that have given markets hope that a recession could be avoided. The government on Wednesday said the economy grew at a 2.9% annual rate from July through September, an upgrade from its initial estimate.

Consumers have continued spending, despite of inflation squeezing wallets, and the overall employment market remains strong.

There is hope on Wall Street that the Fed will slow the scale and pace of its interest rate hikes. The central bank has been very clear about its intent to raise interest rates until it is sure inflation is cooling.

The employment market remains a big focus for the Fed and investors. It's strength has helped the broader economy, but makes it more difficult to cool inflation.

“If we can get a weaker labor market, we'll probably get weaker wage pressure,” said Scott Ladner, chief investment officer at Horizon Investments. “That’s sort of the last shoe to drop with inflation.”

Economic data on Wednesday showed signs of a softening labor market, though it remains relatively strong historically. The U.S. government reported that job openings dropped in October more than economists had anticipated. Human resources company ADP reported an easing in private sector employment growth in November.

Investors will get more data Thursday on the employment sector with a report on weekly unemployment claims. The closely watched monthly report on the job market will be released on Friday.

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Yuri Kageyama and Matt Ott contributed to this report.