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US stocks ended mixed on Wednesday as investors parsed upbeat economic data and adjusted their outlook for interest rates on the back of the latest comments from Federal Reserve officials this week.
Investors are looking to keep the November rally going in the final days of the month, hoping to power the S&P 500 to its best month of 2023.
Investor sentiment perked up after Tuesday's comments from Fed officials, who suggested that the central bank could soon pivot to cutting interest rates. That could prevent overly restrictive monetary policy from pushing the US into a slowdown, Chicago Fed President Austan Goolsbee suggested.
Traders also digested the latest round of economic data, which showed the US economy is on solid footing heading into year-end. GDP was revised upwards to 5.2% last quarter, while Personal Consumption Expenditures — the Fed's preferred inflation measure — was revised lower to 2.3% on Wednesday, a sign that inflation could be closer than previously thought to the Fed's 2% long-run target.
Meanwhile, investors appeared to shrug off data from the Fed's Beige Book, which showed some slowing economic activity over the third quarter. Discretionary and goods sales declined, while labor demand softened.
"The anecdotal evidence suggests the Fed is getting what it wished for – an economy experiencing a painless, measured slowdown," LPL Financial Chief Economist Jeffrey Roach said in a statement. "As pricing pressures will likely ease further in months ahead, markets can reasonably expect the Fed to pause until the middle of next year when the Fed could modestly cut rates. Overall, this is a good report for investors looking to take on more risk."
Markets are now pricing in a 49% chance the Fed could trim interest rates by March 2024, up from a 14% chance priced in a month ago, the CME FedWatch tool shows.
Here's where US indexes stood at the 4:00 p.m. ET closing bell on Wednesday:
Here's what else happened today:
In commodities, bonds and crypto:
