Dow sheds more than 200 points as investors digest mixed economic signals, await Powell speech

The Dow Jones Industrial Average fell on Wednesday as Wall Street scanned new economic data and awaited an afternoon speech on the economy from Federal Reserve Chairman Jerome Powell.

The 30-stock index lost 226 points, or 0.7%. The S&P 500 lost 0.3%, while the Nasdaq Composite climbed 0.1%.

Traders were hit by conflicting economic reports on Wednesday morning.

Payroll processing company ADP said on Wednesday that private companies only added 127,000 posts for the month, well below the consensus estimate of 190,000 from economists polled by Dow Jones. This signaled that the labor market could be cooling, raising hopes that the Federal Reserve would slow its aggressive rate hike campaign.

Data on job openings from the Department of Labor released later on Wednesday showed the number of openings was down and below expectations in October. But there were still more openings than available workers.

The Bureau of Economic Analysis said third-quarter GDP grew at an annual rate of 2.9%, according to its second estimate. This has been revised up from the first estimate of 2.6%, showing the economy is stronger than previously thought.

Meanwhile, pending home sales fell for the fifth consecutive month in October, according to data from the National Association of Retailers.

“The data was somewhat mixed,” said Edward Moya, senior market analyst at Oanda. “But it shows there’s a lot of resilience in this economy. And it still highlights a labor market that’s weakening, but still in relatively good shape. I don’t think we’re going to get any answers on what the policy will be like at the end of next year based on these reports.”

Investors await Powell’s speech at the Brookings Institution this afternoon, which could provide deeper insight into the central bank’s thinking on future interest rate hikes.

The Fed is expected to meet later this month and is largely expected to proceed with a smaller rate hike of 0.5 percentage points after four straight increases of 0.75 percentage points to rein in high inflation. Any signal of a pivot on future rate hikes would likely send markets higher.

“All eyes will be on Chairman Powell’s speech today, but we don’t think he will break new ground,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance. “He wants the stock market down and he’s prepared to endure a recession in order to keep inflation under control.”

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