US stocks waver, on track for 4th monthly loss this year

An NYSE sign is seen on the floor at the New York Stock Exchange in New York, Wednesday, June 15, 2022. Stocks are opening mostly lower on Wall Street Wednesday, June 29 extending a weak stretch for the market into a third straight day. (AP Photo/Seth Wenig)

People walk past the New York Stock Exchange on Wednesday, June 29, 2022 in New York. Stocks shifted between gains and losses on Wall Street Wednesday, keeping the market on track for its fourth monthly loss this year. (AP Photo/Julia Nikhinson)

The New York Stock Exchange on Wednesday, June 29, 2022 in New York. Stocks shifted between gains and losses on Wall Street Wednesday, keeping the market on track for its fourth monthly loss this year. (AP Photo/Julia Nikhinson)

The American flag is shown at the New York Stock Exchange on Wednesday, June 29, 2022 in New York. Stocks shifted between gains and losses on Wall Street Wednesday, keeping the market on track for its fourth monthly loss this year. (AP Photo/Julia Nikhinson)

A person bikes past the New York Stock Exchange on Wednesday, June 29, 2022 in New York. Stocks shifted between gains and losses on Wall Street Wednesday, keeping the market on track for its fourth monthly loss this year. (AP Photo/Julia Nikhinson)

The Fearless Girl statue stands in front of the New York Stock Exchange on Wednesday, June 29, 2022, in New York. Stocks shifted between gains and losses on Wall Street Wednesday, keeping the market on track for its fourth monthly loss this year. (AP Photo/Julia Nikhinson)

Stocks shifted between gains and losses on Wall Street Wednesday, keeping the market on track for its fourth monthly loss this year.

The S&P 500 was down 0.2% as of 2:45 p.m. Eastern. The benchmark index has been volatile all week, and is down about 20% for the year as investors worry about inflation and rising interest rates.

The Dow Jones Industrial Average rose 74 points, or 0.2%, to 31,018 and the Nasdaq slipped 0.3%.

Small company stocks fell sharply in a signal that investors were worried about economic growth. The Russell 2000 slid 1.2%.

Bed Bath & Beyond plunged 23% after reporting a far bigger loss than analysts expected and replacing its CEO.

The government reported that the economy shrank at a 1.6% annual pace in the first three months of the year, its third and final estimate for GDP in the first three months of 2022. That figure was in line with previous estimates, and economists expect growth to resume later this year.

Investors have been closely watching economic data as they try to determine how deeply inflation is hurting consumers and businesses, while also keeping an eye on the Federal Reserve's aggressive shift to raise interest rates.

The central bank is raising rates in an attempt to slow economic growth enough to temper inflation, but Wall Street is wary that the Fed could go too far and push the economy into a recession. Those concerns have been heightened by a series of reports showing a slowdown in retail sales and other indicators.

Consumers were held up as being resilient in the face of rising prices earlier this year, but that sentiment has faded, said Liz Ann Sonders, chief investment strategist at Charles Schwab. The latest GDP revision shows that consumer spending, which accounts for about two-thirds of economic output, was substantially weaker than the government had calculated earlier, growing at a 1.8% annual pace instead of the 3.1% it estimated in May.

“Not only is recession the base case, but I think it already may have begun,” Sonders said.

Fed Chair Jerome Powell, speaking Wednesday at a European Central Bank forum in Sintra, Portugal, repeated his hope that the Fed can achieve a so-called soft landing: raising interest rates just enough to slow the economy and rein in surging consumer prices without causing a recession and sharply raising the unemployment rate.

But, he said the path to achieving that goal has become more difficult and there’s “no guarantee″ the central bank can tame runaway inflation without hurting the job market.

Lingering supply problems and a sharp jump in demand as the pandemic faded sparked a rise in inflation. It has grown worse through the year as supply chain problems worsened following new lockdowns in China to help control COVID-19 cases. Russia's invasion of Ukraine in February sent energy prices higher and resulted in record high gasoline prices that have been eating away at consumers' wallets.

Consumers have shifted spending from discretionary items like electronics to necessities as inflation grows hotter. A weaker-than-expected consumer confidence reading on Tuesday revealed that persistently high inflation was making Americans more pessimistic about both the present and future.

Impacts from the shift in spending is a key focus for investors as companies start to report their latest financial results. Cheerios maker General Mills rose 5.6% after reporting solid financial results and giving investors an encouraging forecast.

Health care and technology companies gained ground. Eli Lilly rose 1.5% and Microsoft added 1.6%. Industrial firms, retailers and energy companies fell. FedEx fell 2.2%, Target slipped 2.1% and Exxon Mobil slid 3.1%.

Cruise lines were among the biggest decliners in the S&P 500. Carnival slid 14.6%, Royal Caribbean dropped 10.2% and Norwegian Cruise Line fell 9.7%.

The yield on the 10-year Treasury fell to 3.11% from 3.20% late Tuesday.

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Economics Writer Paul Wiseman contributed.