US close: S&P 500, Nasdaq hit two-month lows as rate-cut hopes sink

US stocks declined on Wednesday, with the S&P 500 and Nasdaq both hitting two-month lows, as investors significantly scaled back their projections for interest-rate cuts.

The S&P 500 and Nasdaq fell for the fourth straight session, dropping 0.58% and 1.15% respectively, with both indices hitting their lowest levels since 21 February.

The Dow, which had snapped a six-day losing streak on Tuesday, was back in the red, falling 0.12% to 37,753.31.

Weighing on sentiment were comments made on Tuesday by Federal Reserve chair Jerome Powell, who said that recent economic data – such as three straight months of stronger-than-forecast inflation – had "clearly not" given the central bank confidence to start easing monetary policy.

Powell pushed back on market expectations for two or three rate cuts in 2024 – projections that were discussed by Fed officials at their latest meeting. "Right now, given the strength of the labour market and progress on inflation so far, it's appropriate to allow restrictive policy further time to work," he said.

According to the CME Group's FedWatch tool, the market is now pricing in a 16% likelihood of an interest-rate cut at its June meeting, compared with 55% just a month ago.

Nancy Vanden Houten, lead US economist at Oxford Economics, said the economic forecasting agency was dialling back its expectations for the first rate cut from June to September, and cutting its prediction for the number of cuts this year from three to two.

"We think the Fed can be relatively confident that wage growth will slow, but as Fed Chair Powell made clear on Tuesday, officials have become less certain about the path for overall inflation," she said.

In other news, things were relatively quiet on the economic data front, with mortgage applications figures the only major release of the day. Applications rose 3.3% in the week to 12 April, according to the Mortgage Bankers Association of America. This was the sharpest increase in one month, following four consecutive weeks of muted applications. Applications to purchase a new home rose by 5%, while applications to refinance a home ticked up by 0.5%.

Market movers

United Airlines shares were soaring on Wednesday after the carrier beat forecasts with its first-quarter numbers and second-quarter guidance, and finalised a compensation deal with Boeing for damages incurred for grounded jets – though financial details were not given. The stock jumped 17%.

Also surging was Zuora, the enterprise software outfit, which was up 12% on the back of reports that it had received takeover offers.

JB Hunt shares headed south after the transportation services company fell short of expectations on both the top and bottom lines in the first quarter.

Regional bank US Bancorp posted disappointing quarterly earnings and trimmed its lending income outlook on the back of deposit pressures.

Meanwhile Travelers shares suffered their biggest selloff in four years after missing quarterly profit estimates.

Dow Jones - Risers

Unitedhealth Group Inc. (UNH) $478.99 2.15%
Goldman Sachs Group Inc. (GS) $403.91 1.78%
McDonald's Corp. (MCD) $269.99 1.70%
Nike Inc. (NKE) $94.84 1.55%
Coca-Cola Co. (KO) $58.49 0.78%
Procter & Gamble Co. (PG) $156.96 0.65%
Visa Inc. (V) $272.78 0.49%
Merck & Co. Inc. (MRK) $125.38 0.25%
Johnson & Johnson (JNJ) $144.70 0.22%
Chevron Corp. (CVX) $156.40 0.08%

Dow Jones - Fallers

Travelers Company Inc. (TRV) $206.68 -7.41%
Intel Corp. (INTC) $35.68 -1.60%
Walt Disney Co. (DIS) $112.94 -0.83%
Apple Inc. (AAPL) $168.00 -0.81%
Microsoft Corp. (MSFT) $411.84 -0.66%
Home Depot Inc. (HD) $332.83 -0.60%
Amgen Inc. (AMGN) $264.12 -0.57%
Caterpillar Inc. (CAT) $358.32 -0.43%
JP Morgan Chase & Co. (JPM) $180.08 -0.40%
Salesforce.Com Inc. (CRM) $276.32 -0.39%

S&P 500 - Risers

United Airlines Holdings Inc (UAL) $48.74 17.45%
American Airlines Group (AAL) $13.89 6.60%
Globe Life Inc. (GL) $63.23 5.44%
Alaska Air Group Inc. (ALK) $42.72 4.71%
Advance Auto Parts (AAP) $74.05 3.41%
NextEra Energy Inc. (NEE) $63.79 3.39%
Consolidated Edison Inc. (ED) $90.33 3.33%
Norwegian Cruise Line Holdings Ltd (NCLH) $18.02 3.15%
Dominion Energy Inc. (D) $48.32 3.12%
Southern Co. (SO) $69.80 3.00%

S&P 500 - Fallers

Nektar Therapeutics (NKTR) $1.35 -9.40%
J.B. Hunt Transport Services Inc. (JBHT) $168.13 -8.12%
Travelers Company Inc. (TRV) $206.68 -7.41%
ProLogis (PLD) $106.47 -7.19%
Resmed Inc. (RMD) $173.74 -5.97%
Autodesk Inc. (ADSK) $214.92 -5.84%
Advanced Micro Devices Inc. (AMD) $154.02 -5.78%
Lam Research Corp. (LRCX) $912.26 -5.29%
KLA-Tencor Corp. (KLAC) $658.98 -4.95%
Applied Materials Inc. (AMAT) $199.89 -4.58%

Nasdaq 100 - Risers

American Airlines Group (AAL) $13.89 6.60%
Vodafone Group Plc ADS (VOD) $8.28 1.10%
Starbucks Corp. (SBUX) $86.21 0.92%
Regeneron Pharmaceuticals Inc. (REGN) $901.94 0.87%
Check Point Software Technologies Ltd. (CHKP) $158.14 0.85%
Kraft Heinz Co. (KHC) $36.90 0.85%
Mondelez International Inc. (MDLZ) $66.51 0.80%
Alphabet Inc. Class A (GOOGL) $155.47 0.69%
Seagate Technology Plc (STX) $84.20 0.62%
Alphabet Inc. Class C (GOOG) $156.88 0.56%

Nasdaq 100 - Fallers

J.B. Hunt Transport Services Inc. (JBHT) $168.13 -8.12%
Asml Holdings N.V. (ASML) $907.61 -7.09%
Autodesk Inc. (ADSK) $214.92 -5.84%
Lam Research Corp. (LRCX) $912.26 -5.29%
KLA-Tencor Corp. (KLAC) $658.98 -4.95%
Applied Materials Inc. (AMAT) $199.89 -4.58%
Micron Technology Inc. (MU) $116.33 -4.47%
Nvidia Corp. (NVDA) $840.35 -3.87%
Broadcom Inc. (AVGO) $1,282.63 -3.49%
Qurate Retail Inc. (QRTEA) $0.98 -2.86%