US Markets Steady - A Day After Falling On Rate Fears

US stocks steadied on Wednesday and closed mixed, one day after worries about interest rates sent them to one of their worst slumps of the year.

The S&P 500 rose 0.1 percent to 3,992. The Dow Jones Industrial Average fell 0.2 percent to 32,798, and the Nasdaq Composite added 0.4 percent to 11,576.

They were coming off a sharp drop the prior day after the head of the Federal Reserve warned it could speed up its hikes to interest rates if pressure on inflation stays high. Such hikes can ease inflation by slowing the economy, but they also hit prices for stocks and other investments and raise the risk of a recession in the future.

The Fed’s chair, Jerome Powell, said again on Wednesday that inflationary pressures may be higher than earlier expected. But he also stressed much more strenuously than he did on Tuesday that the Fed hasn't made a decision yet on the size of its future hikes.

He said policy makers want to see what reports say in the run-up to their next meeting later this month. That gave some solace to the market, which shuddered a day earlier on fears the Fed was set to increase the size of its rate hikes.

“We’re not on a preset path, and we will be guided by the incoming data,” Powell said.

One report he highlighted in particular came out as he spoke on Wednesday morning. It showed that the number of job openings advertised across the country last month remained higher than expected. Such data has become excruciatingly scrutinized on Wall Street because it can give a clue about where wages are heading for workers.

Strong wage gains are good for workers struggling to keep up with high inflation, but the Fed worries too-high growth could cause a vicious cycle that pushes inflation higher.

While the higher-than-expected number of job openings could spook markets, the report also showed some signs of easing pressure, including fewer Americans quitting their jobs.

A separate report on Wednesday suggested hiring is still stronger across US private employers than expected. It could offer a sneak peek of what another one of the reports highlighted by Powell could say. The US government’s more comprehensive report on hiring is scheduled for Friday.

Last month, a jaw-dropping number for that report revved up worries on Wall Street that inflation may not be cooling as quickly and smoothly as hoped.

Besides that gangbusters jobs report, other data showed surprising strength in everything from spending by US consumers to inflation itself at multiple levels. That caused stocks to drop and bond yields to jump in February.

Because of such strong data, Powell said rates will likely go higher than earlier expected. He also said the Fed may accelerate the pace of its hikes, a turnaround after it had just downshifted the size of its increases last month.

Expectations for a firmer Fed have been most clear in the bond market, where yields have shot higher in recent weeks.

For the moment, the US economy still looks resilient despite the hikes to interest rates the Fed has already thrown at it. The question is how long a strong job market and spending by US consumers can prop up other weakening areas of the economy, especially if the Fed keeps rates higher for longer as it’s been warning. (AP)